APPLE

iPhone 14: cost of components in new Apple smartphones increased by about 20%

Nikkei took apart the old iPhone 14 Pro and calculated that the cost of components in Apple's new smartphones has increased by about 20% over previous-generation models. The American company's production costs rose to record levels, which likely indicates a drop in profitability, as in the US and several other countries, Apple has not increased the price of new iPhones.

At the same time, the basic version of the iPhone 14, devoid of new features, continues to follow Apple's strategy, according to which only the main smartphones receive important innovations and advanced hardware. Apple "obviously has no choice but to resort to a high-end device strategy to stand out as it cannot compete with new features," said Minatake Kashio of Tokyo-based research firm Fomalhaut Techno Solutions, which helped the Nikkei evaluating the components of three iPhone 14 models.

Fomalhaut estimates that the production of the iPhone 14 Pro Max in terms of components costs $501, which is more than $60 more than the cost of components for last year's iPhone 13 Pro Max. The price of components for Apple's flagship smartphones has fluctuated around $400 to $450 since its launch in 2018. However, this year the cost of components for the iPhone 14 Pro Max has increased by $60, which is the most tangible leap in the history of Apple's premium smartphones.

The source notes that the cost of the new iPhone 14 in Japan has increased over the previous generation models. In addition, smartphones have increased in price in Europe. The rise in prices may indicate that the American company has decided to transfer the additional costs of production onto the shoulders of consumers. At the same time, in the US and China, the retail price of Apple smartphones remained the same.

The increase in the cost of the main iPhone 14 Pro models is mainly related to the price of the Apple A16 Bionic microprocessors. Apple's chip costs $110 each to make, which is $2.40 more than last year's Apple A15 Bionic processor. Apple's new processor is manufactured according to 4nm process technology, and only Taiwanese TSMC and South Korean Samsung can currently mass-produce these chips. Additionally, the iPhone 14 has new camera components, including a $15 Sony CMOS image sensor, up 50% from last year.

Components for the iPhone 14 are mainly supplied by US companies, which account for 32.4% of the components, the cost of which has increased by about 10% from last year. The share of South Korean suppliers dropped to 24.8%. Apple has outsourced much of its iPhone production to China, but amid tensions between China and the US, the company is diversifying production to other countries such as India. Revisiting supply chains for electronics and other components could change Apple's strategy going forward.

mundophone