According to a report from UBM Technologies the $150 retail Kinect controller costs Microsoft $56 in terms of materials costs.
EEtimes reports that the unit contains components from PrimeSense Ltd., Marvell Technology Group Ltd., Texas Instruments Inc. and STMicroelectronics NV.
"Basically, the strength of the design is the huge design win for the Israeli fabless company PrimeSense".
"They’ve provided the most innovative portion of the Kinect with their image processor, audio and video interface", states Allan Yogasingam, a technical marketing manager at UBM TechInsights.
That said, Microsoft has apparently spent "hundreds of millions" of dollars
developing Kinect. So, we might not expect a price cut until... let's say Easter 2011.