iPhone 16 Series Teardown: Costs Increase Slightly, Profits Remain Strong

iPhone 16 Series Teardown: Costs Increase Slightly, Profits Remain StrongMarket research firm TDCowen conducted a comprehensive teardown of the iPhone 16 series, comparing its costs to the previous generation iPhone 15 series. Overall, the cost of the iPhone 16 series has increased slightly compared to its predecessors, but this increase is not significant enough to impact Apple's profits

iPhone 16 Series Teardown: Costs Increase Slightly, Profits Remain Strong

Market research firm TDCowen conducted a comprehensive teardown of the iPhone 16 series, comparing its costs to the previous generation iPhone 15 series. Overall, the cost of the iPhone 16 series has increased slightly compared to its predecessors, but this increase is not significant enough to impact Apple's profits.

iPhone 16 Pro Max Sees the Biggest Cost Jump

Among all models, the iPhone 16 Pro Max experienced the most notable cost increase. The 256GB version of the iPhone 16 Pro Max has a BOM cost of $485, which is $32 higher than the $453 BOM cost of the 256GB iPhone 15 Pro Max, representing a 7% increase.

Screen Size and Storage Upgrades Drive Cost Growth

The main drivers for the increased material cost are the higher prices for screens, storage, and processors. The display cost is $80, representing 16% of the total cost, an increment of $5 compared to the previous generation. This increase seems reasonable considering the screen size has grown from 6.7 inches to 6.9 inches.

Storage is the primary contributor to the soaring cost. While the memory capacity remains at 8GB, the upgrade from LPDDR5 to LPDDR5X resulted in a $5 increase in memory cost. Additionally, flash storage cost jumped from $17 to $22. This dual increase in storage cost leads to a combined $10 increase in total cost.

The new A18 Pro processor costs $45, only $5 more expensive than its predecessor.

Storage and Processor Increases Contribute to iPhone 16 Standard Edition's Cost Growth

The cost increase for the standard iPhone 16 mainly stems from the higher storage and processor costs. Due to the upgrade from 6GB RAM to 8GB RAM, the iPhone 16's memory cost soared to $17, almost double the $9 cost of the previous generation. The A18 processor is also $10 more expensive than the A16 chip.

Apple's Profit Margin Remains High Thanks to Premium Pricing

The data reveals that although the material cost of the iPhone 16 series has increased, it still accounts for no more than 40% of the selling price. With premium pricing for models with large storage, Apple's profit margin remains high.

Summary:

The iPhone 16 series experiences a slight cost increase, mainly driven by upgrades in screen size, storage specifications, and processor performance. These upgrades offer users a better experience while increasing the phone's cost. However, Apple's brand premium allows it to maintain high profitability.