Comment by GeekyBear

Apple doesn't only benefit from volume discounts on commodity parts, they also benefit from not having pay a margin on all the parts they designed in-house.

It's not like designing your own part is free, but Qualcomm charges a very healthy margin on top of their manufacturing costs.

Apple also invests in designing the tooling and processes used on their manufacturing lines.

For instance, they cut way back on how much CNC time was required to produce the Neo.