December 9, 2022
iPhone 14 Pro Production Costs Significantly Higher Than Previous Models [Report]

iPhone 14 Pro Production Costs Significantly Higher Than Previous Models [Report]

Posted October 7, 2022 at 4:27pm by iClarified · 3910 views
A Nikkei teardown of Apple's new iPhone 14 Pro models, reveals that production costs have soared around 20% to an all-time high.

Enlisting the help of Fomalhaut Techno Solutions, a Tokyo-based research company, Nikkei was able to estimate the cost of materials for Apple's flagship device.

Fomalhaut estimates that production of the iPhone 14 Pro Max calculated in terms of parts cost $501 -- up more than $60 from that of the iPhone 13 Pro Max that went on sale last year. 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.

iPhone 14 Pro Production Costs Significantly Higher Than Previous Models [Report]

The higher production cost of the iPhone 14 Pro is mainly due to its A16 Bionic chip, that costs $110, over 2.4X more than the A15 chip in the iPhone 13 Pro Max. The 4nm chip is produced by TSMC. In addition, the new larger Sony CMOS image sensor is priced at $15, about 50% higher than the one in previous models.

Notably, Nikkei says components for the iPhone 14 mainly come from U.S. suppliers.

Components for the iPhone 14 mainly come from U.S. suppliers, which account for 32.4% of parts costs -- up about 10 percentage points from the 2021 model. South Korea, the number one supplier last year, saw its share drop by more than 5 points to 24.8%. An increase in the share of Apple-made components contributed to the rise in the ratio of procurement from the U.S.

Despite the increase in production costs and contrary to widespread rumor, Apple kept the starting price of the iPhone 14 the same in the U.S. and Canada. Nikkei believes the company decided to eat added production costs rather than passing them on to consumers. However, if costs continue to rise, it's unlikely this will continue through the launch of the iPhone 15.

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iPhone 14 Pro Production Costs Significantly Higher Than Previous Models [Report]
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