Apple sells big everytime they launch a new iOS device and iPhone 5 isn’t going to be any different. While everyone was underwhelmed by iPhone 5 specs and announcement, it would still sell very well.

It is estimated that more than 20Million iPhone 5s’ will be sold within this year. So when Apple sells such a huge number of iPhone 5’s, how much is Apple really making?

iPhone 5 (Unlocked 16GB) would cost nearly $700 in US. (same as $199 available on contract). We know that iPhone 5 uses high quality Unibody design built by special tools that measure accuracy of the surface upto microns. Of course, it comes with among the best displays available in market, accomopanied with a great processor and camera.

Surprisingly, cost to manufacture iPhone 5 is $167.50 only.

Compared to previous model, iPhone 4S, this is $25 more. The most expensive competent, as one could guess, is the new A6 processor, which costs $28. The second-most expensive item is the Qualcomm 4G LTE modem, which costs $25.

The 16GB iPhone 5 costs $649. With a wireless carrier subsidizing the cost, it costs $199 but you’re tied to two-year contract. Contract is basically a way to subsidize a phone, for which, consumer has to pay royalty amount of $20 on data and voice plans compared to plans available on feature-phones, every month. Accumulated amount over 2 years comes way above the original cost of the phone. In the long run, consumers don’t really benefit from such plans.

So clearly, if you buy unlocked iPhone 5 today, Apple straightaway makes a profit of $481.50. Of course we will have to subtract marketing, engineering and research costs from it, but the resultant profit is still pretty high. This is how Apple collected $8.8 billion in net income last quarter alone.

Apple iPhone 5 definitely surprised everyone and we know there’s more to come.

Checkout individual component cost after the break:

Related: iPhone 5 vs. Galaxy SIII Benchmark [Performance]

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