Apple’s iPhone profit margins shrink as it pays more this year for parts،
Apple spent 12% more on the parts needed to build the iPhone 15 Pro Max compared to what it paid for the components used on the iPhone 14 Pro Max, according to a report from Japan’s Nikkei (via AppleInsider). A teardown of this year’s high-end iPhone revealed that the cost of the parts used to build the device comes to $558. Apple’s profit margin will be affected by the more expensive BOM, especially since Apple has not increased the price of the phone.
While the iPhone 15 Pro Max starts at $1,199, which is $100 more than the starting price of the iPhone 14 Pro Maxthis year, the starting model comes with 256 GB of storage compared to 128 GB on the iPhone 14 Pro Max. Since the latter device with 256GB of storage cost $1,199 at launch, Apple kept its iPhone 15 Pro Max same price in 2023. However, the higher bill of materials for each unit means less profit on the sale of each unit. iPhone 15 Pro Max.
Part of the higher costs is due to the addition of the first periscope lens in iPhone history. Available only on iPhone 15 Pro MaxApple’s implementation of the periscope lens, the tetraprism system that provides 5x optical zoom, results in a cost for the unit’s telephoto lens that is 3.8 times what Apple spent on the telephoto lens used with the iPhone 14 Pro Max. The much-promoted titanium chassis costs 43% more than the stainless steel used on the iPhone 14 Pro Maxand the newest phone’s display costs Apple 20% more than the display it used last year.
Apple spent 12% more on parts to build the iPhone 15 Pro Max
Apple paid TSMC 27% more for the 3nm A17 Pro chip compared to what it paid for the A16 Bionic and that price could have been higher. TSMC offered Apple a sweetheart deal this year that allowed the foundry to bear the costs of defective dies. This deal is estimated to have saved Apple millions of dollars.
The iPhone 15 Pro cost Apple 8% more to produce this year compared to last year’s iPhone 14 Pro. The bill of materials for this model came to $523 for each unit. The parts used to build a single iPhone 15 Plus handset came to $442, 10% more than the iPhone 14 Plus. The largest year-over-year increase belongs to the good old iPhone 15. At $423, this model’s BOM was 16% higher.
Apple added new features to the non-Pro iPhone15 models this year, starting with the Digital Island, and it has also upgraded the image sensor that supports the 48MP main rear camera from 12MP.
There appear to be two processes at work here. As suppliers become more adept at making basic parts that don’t change much from year to year, the costs of these parts decrease each year. The new features will increase the amount of money Apple spends each year to build its phones.
