The smartphone market isn’t doing great, and that’s thanks to the overall economic landscape, with fewer people buying new devices than in previous years. Apple isn’t spared, though the iPhone maker isn’t doing as bad as its main rivals. The iPhone 15’s imminent arrival will further help Apple while spelling trouble for Android vendors.
Moreover, it looks like Android handset makers have a big reason to fear the iPhone 15 Pro and iPhone 15 Pro Max, as the two devices will benefit from an Apple “sweetheart deal” that will hurt Android vendors directly.
The state of the iPhone
iPhone sales dropped 2.4% in the June quarter, meaning Apple made “only” $39.7 billion from selling iPhones. Apple expects improvements during the September quarter when the new iPhone drops. But revenue should stay within the same levels despite the iPhone 15’s mid-September launch.
To put things in perspective, a Counterpoint Research report indicated that US Android shipments dropped 38% during the June quarter compared to just 6% for iPhone. Research from Gallup showed how Apple’s iPhone is eating Samsung’s lunch in Korea ahead of the Galaxy Fold 5 and Flip 5 release.
Despite the state of the economy, Apple is widely expected to increase the prices of the iPhone 15 Pro and 15 Pro Max in the US. Since Apple increased prices last year, international price hikes may or may not happen.
I already explained why the base iPhone 15 would be such a good purchase this year, but I also showed you the strengths of the iPhone 15 Pro and the iPhone 15 Pro Max. I’ll also point out a trend among buyers to go for the more expensive iPhones. The research firm found Omdia found that iPhone buyers preferred the iPhone 14 Pro and 14 Pro Max over cheaper models.
That’s quite telling for what’s coming ahead and may explain why some analysts already expect the iPhone 15 Pro models to outsell the cheaper versions.
Apple’s sweetheart deal
After getting the iPhone 14 Pro, I explained I could have easily purchased the iPhone 14 instead without worrying about what I’d lose. The same goes for the iPhone 15 Pro vs. iPhone 15. But some buyers might want the best possible specs from the iPhone. And that’s where the iPhone 15 Pro will shine. Not compared with the iPhone 15 but with the latest Android devices and upcoming models.
Longtime iPhone fans know TSMC has been the exclusive maker of A-series and M-series chips for the iPhone and Mac. What’s different this year is that TSMC inked a special deal with Apple that spells trouble for Android vendors. That’s because the iPhone 15 Pro and 15 Pro Max will feature the A17 Bionic chip built on TSMC’s new 3nm process. The upcoming M3 chip will also run be a 3nm chip.
TSMC will only manufacture 3nm chips for Apple during the first year, so the likes of Qualcomm and others will have to look to other foundries to manufacture their latest A17 Bionic rivals.
That’s not the only perk that Apple gets. TSMC will apparently eat all the defects costs for producing the A17 Bionic. That will see TSMC paying substantially for chip issues if The Information’s report is accurate. The 3nm chip process has yields between 70% and 80%. Therefore, more than one chip in five is faulty and has to be discarded.
That said, TSMC will undoubtedly benefit massively from this deal. Apple is its biggest customer, and the iPhone maker will pay handsomely for all the 3nm chips that TSMC can mass-produce.
Why will the iPhone 15 Pro be a big problem for Android?
We’ve reached a point where a handset like the Nothing Phone (2) does admirably when it comes to performance despite rocking the Snapdragon 8 Plus Gen 1 chip from the second half of 2022. This is hardly the iPhone 15 Pro killer when it comes to power. It won’t beat the iPhone 15 either, which is an iPhone 14 Pro in disguise.
But Android vendors that make iPhone 15 Pro rivals will want to offer the same specs as the iPhone 15 Pro. Especially to consumers who probably care about specs more than iPhone buyers.
It’s not about saying you’ve got a 3nm processor powering your latest Android flagship. It’s showing what it can do to rival the iPhone 15 Pro and 15 Pro Max. And it won’t even be about performance, as the A17 Bionic’s best feature might be efficiency. Or great battery life that others might struggle to match.
Also, TSMC paying for manufacturing defects will help Apple keep costs down. Android vendors don’t have where to turn for similar savings. All 3nm chips should be more expensive, and the costs will be passed down to the buyer. But Apple’s sweetheart deal with TSMC could help Apple reduce the iPhone 15 price hikes to necessary minimums.
With all that in mind, it’ll be interesting to see what the A17 Bionic rivals can deliver and how Android vendors market their iPhone 15 Pro rivals next year.