iPhone 16 Prices Expected to Remain Steady, But AI Features Could Drive New Profit Growth for Apple

iPhone 16 Prices Expected to Remain Steady, But AI Features Could Drive New Profit Growth for AppleAs always, leaks about the upcoming iPhone 16 have been surfacing even before Apple's fall event. Today, according to a recent report from TrendForce, despite rising memory prices over the past year leading to higher manufacturing costs for Apple's new devices, the company is expected to maintain a cautious pricing strategy considering the overall decline in the smartphone market

iPhone 16 Prices Expected to Remain Steady, But AI Features Could Drive New Profit Growth for Apple

As always, leaks about the upcoming iPhone 16 have been surfacing even before Apple's fall event. Today, according to a recent report from TrendForce, despite rising memory prices over the past year leading to higher manufacturing costs for Apple's new devices, the company is expected to maintain a cautious pricing strategy considering the overall decline in the smartphone market. All four new models are expected to be priced similarly to the iPhone 15 series.

However, to drive sales while maintaining profitability, the two iPhone 16 Pro models might adopt the pricing strategy used for the Pro Max last year, increasing the base storage capacity to 256GB, thus mitigating the impression of a price increase. This is due to the cost differences associated with the periscope lens featured in these models. Additionally, TrendForce points out that even with unchanged prices, the average storage demand will continue to rise due to changing user habits, such as taking and storing high-resolution photos and videos, downloading music and large games, and frequent app installations. Considering Apple's pricing strategy for storage upgrades and the cost of NAND flash procurement, the company could potentially gain more profit from this.

On the other hand, Apple Intelligence, a major highlight of the iPhone 16 series, could become a significant source of revenue for Apple. Neil Shah, partner at Counterpoint Research, suggests that due to the high investment cost in AI, Apple might charge a premium of $10 to $20 for Apple Intelligence to offer more advanced AI features. Apple has put in significant effort for this feature. Mark Gurman, a technology journalist, previously reported that Apple plans to make the Apple Intelligence platform a key component of iPhone sales in stores this fall and has already started training retail employees about the feature.

From a hardware perspective, TrendForce predicts that all four new models in the upcoming iPhone 16 series will feature the new A18 and A18 Pro processors, manufactured using TSMC's 3nm process. This could break the trend of standard models using previous-generation processors in the past two years. Trendforce speculates that this change might be related to processor cost considerations. In terms of displays, the iPhone 16 series will fully adopt AMOLED panels, with the Pro models introducing BRS (Border Reduction Structure) technology for the first time, potentially enabling ultra-thin bezel displays. TrendForce also notes that the display sizes for both iPhone 16 Pro models will be slightly larger than their predecessors.

Furthermore, despite earlier rumors suggesting an increase in the refresh rate to 90Hz for the iPhone 16 and 16 Plus, they will ultimately remain at 60Hz. Regarding memory, to fully support Apple Intelligence, the iPhone 16 and 16 Plus will see an upgrade in DRAM capacity this year, meaning all four new models will feature LPDDR5X 8GB.

Concerning production volumes, TrendForce states that market expectations for Apple Intelligence have intensified after WWDC24, coupled with the low base in 2023. It is estimated that the total output for all four new iPhone models in the second half of 2024 will reach 86.7 million units, representing an increase of nearly 8% year-on-year.

In conclusion, although the iPhone 16 series is expected to maintain pricing similar to its predecessors, Apple will employ strategies to enhance the profitability of the new models, including increasing base storage, introducing Apple Intelligence, and upgrading hardware specifications. Apple Intelligence, as a major highlight, has the potential to become a new profit growth driver for Apple and drive sales growth for the iPhone 16 series.