iPhone only costs $100 to make?

Apple is likely to reap significant profits despite slashing the cost of its updated iPhone in half, said analysts. Although details about the phone are still scarce, sources said they believe Infineon and Samsung have continued to snag the top chip designs in the handset.

The raw cost of materials to build the iPhone 3G could be nearly half that of the original model, according to Portelligent Inc. (Austin) that conducted a teardown analysis of the first handset. The first phone had a bill of materials estimated at $170 at launch, but the iPhone 3G could have a BOM as low as $100 when it debuts July 11, said David Carey, president of Portelligent, a division of TechInsights, the publisher of EE Times.

The cost cut is also strategic for a company seeking to extend its toehold in the massive cellular market. Apple has sold 6 million iPhones to date mainly in the U.S. in a market where nearly a billion handsets ship each year worldwide.