Considering the parts go into building an iPad Air, ISH Suppli has estimated that the device costs about $274 to $361 to make, depending on the model.
That's a pretty steep drop from the $499 that Apple is selling the cheapest model of the iPad Air for, but it doesn't take into consideration the fees that go into getting the device to your local store. Either way, it's good news for Apple, since they were about to cut down their production price by $42 in comparison to last year's model. It might not seem like too big a jump at first, but when you consider that the 128GB Wi-Fi and LTE iPad Air goes for $929, they're making a hell of a lot of profit from those purchases, even after shipping and other costs. There were some changes, though, that Apple made that bumped up the price of some parts, while knocking down the price of a few others. “What I expected to see inside was basically an iPhone 5s with a bigger display,” Andrew Rassweiler of ISH told AllThingsD. “That was a little true, but a little not.”
The display and the touchscreen assembly changed from the previous generation: it's thinner and has fewer laters, and cost about $133 for both the display ($90) and touchscreen parts ($43.) But because there were not a lot of radical changes to other parts, Apple was able to keep down costs with manufacturers. If they had changed a lot more, the manufacturers would have charged more.
Check out the exploded iPad Air below.