Not all flash is the same. SD cards and USB sticks use cheap, slow, high-density flash manufactured with older processes. The A4/A5 flash is also integrated into the same package as the CPU(s). Most analysts estimate the flash as a significant part of the overall cost of iOS devices. Yes, it is market segmentation as well, but that extra flash still isn't free.
> The A4/A5 flash is also integrated into the same package as the CPU(s)
Really? That would be by far the most aggressive die stacking I've ever heard of, if true. I thought it was soldered to the motherboard in stacks of 2-4 dice.
See step 16 of iFixit's iPad teardown. Looks like both ram and flash are separate assemblies. Only the iPhone has the ram integrated with the CPU package.
To support my original point, though, iSuppli's breakdown of the iPhone 4 last summer had the 16 GB flash chip as the second-most expensive component, after the retina display, at ~15% of the total outlay on parts.
