Samsung Electronics is spending more to build its new flagship Galaxy S5 than the previous model despite a slowdown in the high-end smartphone market.
The 32-Gigabyte Galaxy S5, which is water resistant and features a heart-rate monitor and fingerprint scanner, costs an "astronomical" $256.52 to build, according to teardown analysis by IHS. The model, which was launched on Friday, is selling for around $650 off-contract in the U.S.
This is well above $236 required to build its predecessor and $207 for the iPhone 5S. It contrasts even more starkly with smartphones at the lower end of the cost spectrum, such as the ZTE U793, which has a materials bill of less than $35, according to the market research firm.
"Samsung is throwing more components into the device - they know that the high-end is going to be very competitive and they want to differentiate themselves. That in effect is their strategy," Wayne Lam, senior analyst, wireless communications at IHS told CNBC.
"They are really competing both against Apple and their Android ecosystem – so there is more competitive impetus to innovate by adding more features," he added.