As AllThingsD says, we mention higher performance and cheaper iPad Air production, compared to iPad 3 models.
In terms of iPad Air production, we are talking about 274-361 dollars depending on the model. This means first of all a huge profit for the manufacturer, while the device is sold for between 499 and 929 U.S. dollars. The cheapest is, of course, the 16 GB with WiFi, and the most expensive at 128 GB with WiFi and LTE. On the other hand, the cheapest iPad Air model is $42 less than the iPad 3 product, whose production cost would amount to $316.
The most expensive manufacturing component for Air iPad is, as expected, its display, whose cost is $133. This includes both the IPS panel and touchscreen elements. Specifically $90 for the panel, and still $43 for the touchscreen. The new A7 chip only costs $18, $5 cheaper than the A5 chip from the iPad 3.
In this case, Apple’s profit is 45 percent for the 16 GB model with WiFi and no less than 61 percent for the most expensive variant, the 128 GB of LTE. These things should not surprise us, given that any manufacturer optimizes its production process, especially for devices that have a continuity. But Apple manages to make some impressive cost reductions in this regard.