Xiaomi’s $130 Red Rice costs just $85 to make

Remember the Xiaomi Red Rice? This is the affordable smartphone that is driving the Chinese company’s sales nowadays, as it offers an incredible price per features ratio. It’s being sold by Xiaomi for just 799 yuan, which is around $130 or €98 – and we’re talking contract-free here. Yes, that’s pretty amazing.

But you know what is even more amazing? How much it costs Xiaomi to make each Red Rice unit. Perhaps seeing the price it’s selling at you were under the impression that the Chinese company is making little or no profit on the Red Rice, but that’s not the case.

According to a report from TrendForce, the Bill Of Materials (BOM) for the Xiaomi Red Rice amounts to $84.7. And since Xiaomi doesn’t sell its wares through physical stores, that means most of the difference between that and the $130 selling price is pure profit. So now no one can say that cheap smartphones aren’t or can’t be profitable for their makers!

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The 4.7-inch 720p HD touchscreen is the single most expensive component in the Red Rice, coming in at $18.7. Next up is the MediaTek-provided MT6589T processor and baseband at $16.8. The memory (both RAM and internal storage together) takes the last place on the podium with an estimated cost of $11.2. The touch module costs $8.3, and the 8MP rear camera is $7.7 – and then prices all go downhill from there.

The Red Rice is a great example of a sub-$150 smartphone, a category that is set to explode in terms of sales in the near future, as specs in this price range finally become adequate for a decent user experience. Next year, such devices are expected to account for 14% of total smartphone shipments worldwide, up from 11% in 2013.

Author: Vlad Bobleanta

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