Before Apple introduced the iPhone 14 series last month, rumors believed the company would increase the price point of the new models due to supply chain issues and inflation. After the “Far Out” event, we learned that Apple didn’t change the price of the newer iPhones, although they are now more expensive to be made, according to a report.
In Nikkei Asia‘s teardown, the publication discovered that producing the iPhone 14 series is 20% costlier than the previous generation, making production costs soar to an all-time high.
Fomalhaut Techno Solutions, a Tokyo-based research company that helped Nikkei examine three models in the iPhone 14 series, says the production costs of the iPhone 14 Pro Max were $501 – up more than $60 from the iPhone 13 Pro Max.
While parts prices for high-end Max models have hovered between $400 and $450 since they debuted in 2018, the latest model represents a steep production cost rise of over $60. The cost of the iPhone Pro 14 Max is thus the highest in terms of both total and the margin of increase since 2018.
The publication says the production costs more due to the A16 Bionic chips, available on the Pro models. “The proprietary chip costs $110 – over 2.4x more than the A15 version” used in last year’s iPhone 13 Pro Max – because TSMC and Samsung are the only companies that can mass-produce 4nm chips.
The camera components are also pricier. The sensors from Sony Group’s CMOS are up to 30% larger than previous models and priced about 50% higher at $15.
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 examine three models in the iPhone 14 series, which launched in September.
It’s important to note that while production costs were raised, the cheaper iPhone model now starts at $799 since there’s no more iPhone mini available. In addition to that, BGR already covered that customers are focusing on buying the more expensive iPhone 14 Pro and iPhone 14 Pro Max models, which also brings higher profit margins for Apple.
More Apple coverage: iPhone SE 4 will have a big redesign.