Apple announced the iPhone 12 series a few months ago and the device has been very well received. However, Apple mostly kept the prices same as last year. Now, it has been reported that the iPhone 12 is 21 percent more expensive to manufacture than last year's iPhone 11. While some of the portion of the components is developed and manufactured by Apple, there are certain areas where per unit cost increased compared to its predecessor.
Apple's iPhone 12 is 21 Percent More Expensive to Manufacture Compared to Its Predecessor
According to the latest research by Counterpoint, Apple's self-designed components in the iPhone 12 makes up about 16.7 percent of the overall material cost. This includes the A14 Bionic chip as well as the Ultra Wideband chip incorporated in the iPhone 12. However, a major shift in terms of display quality has increased $23. What this means is that the shift from LCD to the OLED panel allowed for an over $23 increase in cost.
Producing a 128GB iPhone 12 mmWave (millimeter-wave) smartphone will cost Apple up to $431, 26% higher compared to the iPhone 11, according to the latest bill of materials (BoM) analysis by Counterpoint's component research practice. Despite over $27 cost savings due to the simplified RF design, the BoM cost of the sub-6GHz-only model for overseas markets still increased by 18%.
Assuming a 38% mmWave mix, the blended materials cost for the iPhone 12 with 128GB NAND flash is nearly $415, a 21% increase over its predecessor. Application processor, 5G baseband, display and 5G RF components represent the major areas of the cost increase.
Apple's iPhone 12 Pro and iPhone 12 Pro Max start at the same price as their respective predecessors - $999 and $1,099. Apple introduced the iPhone 11 Pro and iPhone 11 Pro Max at the same price. Take note that the 256GB and 512GB variants of both iPhone 12 Pro models feature a $50 cheaper price tag. The iPhone 12 starts at $799 while the mini starts at $699. We also recently heard that the iPhone 12 mini has received disappointing results in terms of sales as of now.
Apple seems to have tightened the lid on component suppliers in an attempt to keep the costs at bay for the 5G technology. This will ultimately minimize the need to charge more. In addition to this, Apple has also made use of the hybrid battery board for the iPhone 12 which is 40 to 50 percent cheaper than the one used in iPhone 11 models. According to reports, Apple will further squeeze the price with the iPhone 13 this year.
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