It's actually rather amazing that the PS4 only costs $399 (USD) at retail stores as a recent hardware breakdown found that the components total about $381 (USD) for the system. This is in stark contrast to when the PlayStation 3 debuted in 2006. That console was found to cost $805 to make and sold for "just" $599.

To get into the particulars, chips take up a big proportion of the cost of the internal components. An unusually large microprocessor that is manufactured by chipmaker Advanced Micro Devices costs about $100 to build. When combined with the cost of memory chips, at $88 for 16 individual memory chips, you have more than half of the cost figured in, Rassweiler said.

The AMD chip is 350 square millimeters, making it the physically biggest chip that IHS has ever seen built on the relatively new 28-nanometer manufacturing process. “This chip is just gigantic,” Rassweiler said. “It’s almost three times as big as the next-biggest chip we’ve seen.”(...)

The other big cost is memory chips. There are no fewer than 16 individual memory chips in the PS4, costing Sony about $88. The cost of the processor and the memory works out to $188, nearly half of the total cost, Rassweiler said.

After chips, the parts inside the PS4 become somewhat less unusual. There’s the hard drive from Seagate ($37), wireless chips from Marvell and Skyworks and an optical drive that costs about $28.

The controller itself costs about $18 to build, which includes Bluetooh chips, audio chips, and a motion sensor chip. These teardowns were done by IHS iSuppli, with the information broken down by AllThingsD.