What Display Daily thinks: There’s a lot to parse in the data below. You could say Apple’s increased spending shows it is pushing the envelope and innovating. The big price jumps are in cameras and proprietary silicon. The big reliance is on Samsung and LG. Prices of the iPhone 15 are stable for now, but how long can Apple keep doing that? And frankly, how much more of a cost burden can consumer bear on smartphones, no matter how innovative?
Manufacturing and component costs are rising across the industry. But, it seems like Apple’s competitors only have to figure out how to work more with Samsung and LG to find new opportunities because they are the suppliers that are helping to create the technology that is most noticeable and front-facing.
Or, you could say that Chinese display vendors and smartphone manufacturers are showing how you can circumvent Apple, Samsung, and LG to create your own supply chain of innovation, and start mopping up customers from the bottom up.
LG and Samsung Account for 29% of Primary Components of Apple’s Latest Smartphone
Apple saw production costs for its flagship iPhone 15 Pro Max model increase by around 10% YoY, marking the second consecutive annual rise, according to an analysis by Nikkei and research firm Fomalhaut Techno Solutions.
While Apple absorbed most of the impact this year, analysts predict the tech giant will start passing more costs onto consumers in 2024 with the next iPhone generation. Fomalhaut estimates the iPhone 15 Pro Max, with 256GB of storage, cost Apple $558 to produce. That’s a 12% increase over the estimated $499 production cost for last year’s iPhone 14 Pro Max.
Driving the increase were pricier components like the new 48MP telephoto camera, titanium frame, and cutting-edge A17 processor chip. The telephoto camera cost $30, nearly 4X more than the 14 Pro Max, while the titanium frame added $50 over steel.
Meanwhile, the A17 processor carried a $130 price tag, 27% higher than the A16 chip. Experts say advanced manufacturing is required for the A17’s power, adding to its cost.
Geographically, South Korea now accounts for 29% of primary iPhone components by value, up about 5 percentage points and driven by LG’s camera parts and Samsung’s displays. The U.S. remains the leader at 33%. But while costs are up, U.S. pricing on non-Pro Max models stayed flat. As a result, cost-to-price ratios increased 7 percentage points for the iPhone 15 and 4 points for the 15 Plus.
