A comprehensive teardown of Apple’s iPhone 14 series has revealed that it cost the company a whopping 20% more to manufacture in terms of components alone than last year’s iPhone 13 lineup — reports Nikkei Asia.
Even though production costs have gone up, the iPhone 14 lineup retails for the same price as its predecessors in the U.S. and many other markets. It looks like Apple decided to simply eat the added cost instead of passing it on to customers, at least in these markets.
Some countries such as Japan, however, did see price adjustments to account for the weakness of their local currencies against the U.S. dollar in recent times.
Apple “evidently has no other choice but resort to a strategy of mounting high-performance devices to differentiate itself as it cannot compete on new functions,” said Minatake Kashio of Fomalhaut Techno Solutions, a Tokyo-based research company that helped Nikkei with the teardowns.
According to Fomalhaut’s estimates, iPhone 14 Pro Max cost Apple $501 USD for parts alone. That represents an increase of more than $60 from last year’s iPhone 13 Pro Max.
The A16 Bionic chip that powers this year’s “Pro” iPhone models alone costs $110 — 2.4 times the price of the A15 SoC in the iPhone 13 Pro Max and this year’s non-Pro iPhones, thanks in large part to the fact that it is based on TSMC’s cutting-edge 4nm process.
What’s more, the chips for next year’s iPhones could prove even costlier. TSMC is already on board to manufacture A17 chips based on its next-generation 3nm process for iPhone 15 Pro models due to launch in 2023.
In addition, Apple also equipped iPhone 14 Pro models with upgraded — and thus pricier — camera components. The camera sensors for this year’s models reportedly cost about 50% more than their predecessors.
Apple’s production costs for this year’s iPhones were at an all-time high. Overall, the iPhone 14 represents the biggest jump in both component cost and cost-to-retail price ratio for Apple since 2018 when the company debuted its first “Max” tier iPhone, the XS Max.
Components are just one variable of the cost equation for a product. It also has to account for the research and development that goes into it, marketing, and labour and production costs.
Most of Apple’s iPhone production takes place in China. However, the Cupertino, California-based tech giant is trying to diversify its production capacity beyond China amidst U.S.-China trade tensions and the fallout of extensive COVID-19 lockdowns in the Asian country.
Apple has already started manufacturing iPhone 14 models in India and is expected to move 25% of overall iPhone production to the South Asian country by 2025. The company is also looking to put down production roots in other countries in Southeast Asia, including Vietnam.
Apple today initiated deliveries and in-store availability of the iPhone 14 Plus, rounding out this year’s iPhone lineup.
