11/15 Update below. This article was originally published on November 12
Apple has introduced global price increases for the iPhone 14 lineup, with only China and the United States escaping the increases. Now, a new leak of the iPhone 15 is claiming the costs are going up a lot more, and it looks like no one will escape the increases this time around.
In a new tweet, a popular anonymous industry insider LeaksApplePro revealed that Apple’s new flagship, the iPhone 15 Ultra, “will cost significantly more to manufacture than the iPhone 14 Pro Max.” While he doesn’t reveal how much that is, it does open the door to price hikes across the lineup.
For those unfamiliar with the iPhone 15 Ultra, it’s expected to replace the Pro Max in Apple’s next line of iPhones. And “replace” is the essential part of that.
Initially, the Ultra was seen as a fifth iPhone 15 model, a new hero device showcasing the best of Apple. It’s a strategy that fits into the company’s flagship iPad Pro and MacBook Pro models ($2,000 and $6,100, respectively). Apple’s highest performance M1 chip is also named “Ultra”.
When new leaks revealed that the iPhone 15 Ultra was just an exercise in rebranding, fears of a big price hike eased. Apple would simply place the iPhone 15 Ultra in place of an iPhone 15 Pro Max, and the range – iPhone 15, iPhone 15 Plus, iPhone 15 Pro and iPhone 15 Ultra — would be simpler than the X, XR, XS, and Pro Max word salad of the past few years. But not so fast.
11/14 Update: Leaks ApplePro has provided further information on the increased manufacturing costs of the iPhone 15 Ultra. Talking with me, the lessor says the new BOM will increase up to $100.
While that might not seem like “substantially more,” it’s important to remember that it’s the cost to Apple, not the buyer. For comparison, last month Nikkei Asia The revealed components of the iPhone 14 Pro Max cost Apple $501, and the price of the smartphone starts at $1099. That said, it’s overly simplistic to say that $1 on component costs equals $2 added to the asking price.
“The A16 [iPhone 14 Pro] is $50 more expensive than the A15 [iPhone 14 and 13] to manufacture,” says LeaksApplePro, “but the price of the Pro is still surprisingly 999…Apple’s pricing policy is weird. If I had to guess, it might be a $150 increase (but that’s just a guess). »
Another factor is how Apple decides to price the iPhone 15 line internationally. With the iPhone 14 lineup, Apple effectively subsidized prices in the US and China by raising prices for the rest of the world – by some countries up to 20%.
“It’s a pretty common thing,” notes LeaksApplePro, “If your costs go up, you’re making the ‘compliant’ market pay for less compliant, so everyone’s happy.”
The problem is that it’s not sustainable in the long term, which makes it all the more likely that the US and China will have to bear the increased costs of this generation. The silver lining? At least you still have plenty of time to save.
Update 11/15: LeaksApplePro contacted me for more information. The leak highlights Apple’s next-gen A17 chip as a major factor, noting that it “will definitely be more expensive.”
It’s an interesting twist because 1. The iPhone 14 Pro’s A16 was twice as expensive like the A15 used in the iPhone 13 and iPhone 14, and 2. The Daily economic news reported in September that Apple had rejected a price increase for the chip from TSMC, its main chip supplier.
“Originally it was rumored in the industry that TSMC’s price would increase next year, ranging around 6% to 9% depending on the process, but later it was rumored that there was a negotiated correction, and the increase went from 3%, and the mature process growth rate was 6%,” TSMC explains. “However, the latest rumor is that Apple, a major customer, is refusing to increase the price.”
Given Apple supply chain pressures recognized last week, there is every chance that a compromise has been found between the two parties. However, this issue continues to impact iPhone 14 Pro and Pro Max shipments, with Apple warning that “we now expect shipments of iPhone 14 Pro and iPhone 14 Pro Max lower than we previously anticipated, and customers will experience longer wait times to receive their new products.”
LeaksApplePro also highlights a second, more obvious factor: the move to a titanium chassis. Whether that will happen remains to be seen, but, as mentioned below, it’s a material 35 times more expensive than the stainless steel used for the iPhone 14 Pro and Pro.
Titanium is as strong as stainless steel at just 40% of the weight, a significant factor when, at 240g, the iPhone 14 Pro Max is one of the heaviest slab phones in the world. Apple could also compromise and double the strength of the chassis while making the phone lighter than its predecessor. Something that would help sell the “Ultra” moniker.
Last month, leaks revealed that the iPhone 15 Ultra would have stunning upgrades like dual front cameras and a titanium chassis, a material about 35 times more expensive than the Pro Max’s stainless steel. The latest information from LeaksApplePro therefore makes a lot of sense.
While rising manufacturing costs don’t always lead to price increases, you should be prepared for when they cost “significantly more”. Apple has margins to preserve. In addition, the company has a clear pricing structure, and this does not imply a model positioned well above the rest – there are always increments. So if the UItra goes up, the rest of the range will have to close the gap to meet it.
Yes, in an era of extreme inflation and a cost of living crisis, it’s a shock to think that Apple will raise iPhone prices for the second year in a row. Even US customers are now spending up to 15% more on average to purchase iPhones. Indeed, the $899 iPhone 14 Plus replaced the $699 iPhone 13 Mini, so the $799 iPhone 14 became the new entry point, while their disappointing upgrades pushed more customers to the Pros.
So prepare for further iPhone price increases in 2023. The good news? At least it looks like you’ll be getting USB-C back…
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