According to an iSuppli teardown, the Kindle 2 costs $185 to build—or about half the device's $360 sticker price. That's $176.83 in parts, $8.66 in construction costs. Here's the major component breakdown:

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E Ink Display (by E Ink)
$60

EVDO (by Novatel)
$39.50

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Baseband Processor (by Qualcomm)
$13.18

8-Layer Printed Circuit Board (by Multek)
$9.83

532MHz Multimedia Application Processor (by Freescale Semiconductor)
$8.64

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Battery (by LICO Tech)
$7.50

Main Enclosure
$4.45

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(Interestingly enough, the main enclosure costs more than the than the RAM or Flash storage.) Keep in mind that this price excludes Amazon's costs for EVDO service, along with the standard R&D, shipping, yada, yada. [iSuppli]