iPhone 15 Costs Rise, Apple May Hike Prices in 2024: Report

A recent teardown analysis by Nikkei, in collaboration with Tokyo-based Fomalhaut Techno Solutions, reveals that the production costs for Apple’s iPhone 15 Pro Max have increased by 12% compared to its predecessor, the iPhone 14 Pro Max.

The estimated production cost for the top-tier model stands at $558, marking a record high for the second consecutive year.

“The estimated production cost of the model, calculated by adding up the costs of all parts used, stood at $558, a 12% increase from the 14 Pro Max model released in 2022,” said Minatake Kashio, CEO of Fomalhaut Techno Solutions. Kashio noted that the rising costs are due to the exhaustion of easy performance upgrades, requiring more expensive components to achieve further improvements.

The iPhone 15 Pro Max features a telephoto camera with 5x optical zoom and a semiconductor device manufactured using 3-nanometer processing technology. The cost of the telephoto camera alone jumped to $30, 3.8 times higher than that of the 14 Pro Max.

The new frame, made of lightweight and durable titanium, costs $50, a 43% increase over traditional stainless steel frames. The main supplier for the frame is Foxconn Technology in mainland China.

The latest A17 Pro chip, designed in-house, costs $130, a 27% increase from last year’s A16 chip. Apple outsources its chip production to Taiwan Semiconductor Manufacturing Co. (TSMC), where the prices of extreme ultraviolet (EUV) lithography machines are soaring, contributing to the higher chip costs.

Despite these increases, Apple has maintained U.S. prices for its latest iPhones, except for the top-of-the-line model. Prices in Canada, however, increased across the iPhone 15 lineup.

Analysts speculate that Apple will pass on higher component prices to its customers in 2024. “If Apple continues to forgo passing on increased costs to consumers, the company’s bottom line will eventually take a hit,” Kashio added.

The component cost for the base iPhone 15 model rose by 16% to $423, while that for the 15 Plus increased by 10% to $442, and the 15 Pro by 8% to $523. With global inflation affecting various sectors, all eyes will be on Apple’s pricing strategy for the iPhone 16 series, expected to be unveiled 11 months from now.