Analysis of the disassembly of the latest iPhone 15 series shows a significant increase in production costs, especially for the top model. This is the second consecutive year of record cost increases.
While the company has absorbed most of the cost increases this year, there is speculation that it may pass these higher component costs on to customers in 2024.
Cost analysis of four models
Nikkei, with the assistance of Tokyo-based research firm Fomalhaut Techno Solutions, broke down and analyzed the cost of four models released in September: the iPhone 15, iPhone 15 Plus, iPhone 15 Pro and iPhone 15 Pro Max. The analysis focused on the models with the smallest amount of internal memory.
Top model 15 Pro Max
The top-of-the-line iPhone 15 Pro Max model features a telephoto camera with 5x optical zoom and a semiconductor made with advanced 3-nanometer technology. The estimated price of this model is $558, which is a 12% increase compared to the 14 Pro Max model released in 2022.
Value to price ratio
The cost-to-price ratio of the 15 Pro Max is 47%, which is 1 percentage point more than the 14 Pro Max. Notably, the cost of the body camera has increased significantly to $30, which is 3.8 times more than the 2022 model.
The new lightweight and durable titanium frame costs $50, which is 43% more than the traditional stainless steel frame. The latest A17 Pro chip costs $130, which is 27% more than the previous model.
Factors affecting the cost
The cost increase is due to factors such as higher component prices, including the extreme ultraviolet lithography (EUV) machines used to produce the chips. However, prices for NAND flash memory chips declined due to low demand, which offset some of the cost increases.
About 29% of primary components are sourced from South Korea, with the largest share, 33%, coming from the US. LG Group and Samsung Group are the key suppliers. Japan’s share remained at 10%.
Pricing decisions and future pricing strategy
Apple maintained U.S. pricing for most iPhone 15 models, except for the top-of-the-line model, despite rising global prices for everyday goods and services. This suggests the company is being cautious to avoid a decline in sales.
Apple may consider raising prices on models other than the Pro Max next year to offset increased costs. The tech giant’s pricing strategy will be scrutinized in the future when the iPhone 16 series is unveiled.