&#62; Surely every manufacturer knows how much their supplies cost?<p>They know the price today, but not the price next year. Think about Apples predicament with PowerPC not that long ago. It probably cost them quite a lot to make the change to Intel. I think A4 is a hedge against that same situation happening again - where they face a technical challenge altering their platform to avoid a critical performance disadvantage.<p>&#62; Also, for the iPad it is only the chip that Apple creates themselves.<p>From a performance (battery and speed) standpoint the chip is probably more important than the display panels. Disks and RAM are debatable. AFAIK they manufacture the controllers for those though. That allows them tight integration with their OS. That is definitely an advantage since they can write their code with a much more limited architecture in mind.<p>All this being said, I doubt this is an advantage that will last. Companies that specialize generally outpace companies that generalize. I wouldn't be surprised if in 5 years, once Intel or whoever catches up with a chip specialized for this type of hardware, then Apple switches back.<p>This is really more a first mover advantage. They get to come out of the gate with a better overall package because they rolled their own practically everything (and can you think of anyone else who could ... from chip to OS and most of the inbetween). Remember this is a new category of product - the types of internal components well-suited to this type of technology are not in wide spread production at the moment. By the time they are turned into commodities Apple hopes to have a market lead.