11/15 Update below. This post was originally published on November 12
Apple introduced global price rises for the iPhone 14 range, with only China and the US escaping the hikes. Now a new iPhone 15 leak claims costs are going up a lot more, and it looks like no one will escape the increases this time.
In a new tweet, popular anonymous industry insider LeaksApplePro has revealed that Apple’s widely leaked new flagship, the iPhone 15 Ultra, “will cost substantially more to manufacture than the iPhone 14 Pro Max.” While he doesn’t give away how much this is, it opens the door for price rises across the range.
For those unfamiliar with the iPhone 15 Ultra, it is expected to replace the Pro Max in Apple’s next iPhone lineup. And “replace” is the critical part of this.
Initially, the Ultra was tipped as a fifth iPhone 15 model, a new hero device showcasing the very best Apple can make. It’s a strategy that fits in with the company’s flagship iPad Pro and MacBook Pro maxed-out models ($2000 and $6100, respectively). Apple’s top performing M1 chip is also named ‘Ultra.’
When further leaks revealed that the iPhone 15 Ultra is simply a rebranding exercise, fears of a big price increase eased. Apple would simply slot the iPhone 15 Ultra in place of an iPhone 15 Pro Max, and the lineup — iPhone 15, iPhone 15 Plus, iPhone 15 Pro and iPhone 15 Ultra — would be more straightforward than the X, XR, XS and Pro Max word salad of recent years. But not so fast.
11/14 Update: LeaksApplePro has provided further information on the increased manufacturing costs for the iPhone 15 Ultra. Speaking with me, the leaker says the new bill of materials will increase by up to $100.
While this may not sound “substantially more,” it is important to remember that this is the cost to Apple, not the buyer. For comparison, last month Nikkei Asia revealed iPhone 14 Pro Max components cost Apple $501, and pricing for the smartphone starts at $1099. That said, it is overly simplistic to say $1 on the component costs equals $2 added to the asking price.
“The A16 [iPhone 14 Pro] is 50 bucks more expensive than the A15 [iPhone 14 and 13] to manufacture,” explains LeaksApplePro “yet the price for the Pro is still surprisingly at 999… Apple pricing politics are weird. If I had to guess, that’s maybe a $150 increase (but that’s just a guess).”
Another factor is how Apple decides to price the iPhone 15 range internationally. With the iPhone 14 lineup, Apple effectively subsidized pricing in the US and China by increasing prices for the rest of the world — in some countries by as much as 20%.
“It’s quite a common thing,” notes LeaksApplePro, “If your costs increase, you make the “compliant” market pay for the less compliant one, so everyone’s happy.”
The problem is this is unsustainable long term, making it all the more likely that the US and China will have to bear the increased costs for this generation. The silver lining? At least you still have plenty of time to save up.
11/15 Update: LeaksApplePro has contacted me with further information. The leaker highlights Apple’s next-generation A17 chip as a major factor, noting that it “will certainly be more expensive.”
This is an interesting twist because 1. The iPhone 14 Pro’s A16 was twice as expensive as the A15 used in the iPhone 13 and iPhone 14, and 2. The Economic Daily News reported in September that Apple had rejected a price increase for the chip from TSMC, its primary chip supplier.
“Originally, it was rumored in the industry that the price of TSMC would increase next year, ranging from about 6% to 9% according to the process, but later it was rumored that there was a negotiated correction, and the increase jumped from 3%, and the growth rate of the mature process was 6%,” TSMC explains. “However, the latest rumor is that Apple, a major customer, refuses to raise the price.”
Given the supply chain pressures Apple acknowledged last week, there is every chance that a compromise has been struck between both parties. This issue continues to impact iPhone 14 Pro and Pro Max shipments, however, with Apple warning: “we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated, and customers will experience longer wait times to receive their new products.”
LeaksApplePro also highlights a second, more obvious factor: the move to a titanium chassis. Whether this happens remains to be seen, but, as mentioned below, this is a material that is 35x more expensive than the stainless steel used for the iPhone 14 Pro and Pro.
Titanium is as strong as stainless steel at just 40% of the weight, a significant factor when, at 240g, the iPhone 14 Pro Max is one of the heaviest slab phones in the world. Apple could also compromise and double the strength of the chassis while making the phone lighter than its predecessor. Something which would help sell the “Ultra” moniker.
Last month leaks emerged that the iPhone 15 Ultra would have head-turning upgrades like dual front-facing cameras and a titanium chassis, a material that is approximately 35x more expensive than the Pro Max’s stainless steel. So LeaksApplePro’s latest information makes a lot of sense.
While increased manufacturing costs don’t always lead to price increases, you should brace yourself when they cost “substantially more.” Apple has margins to preserve. Moreover, the company has a clear pricing structure, and it doesn’t involve one model positioned far above the rest — there are always increments. So if the UItra goes up, the rest of the range will have to close the gap to meet it.
Yes, in a time of extreme inflation and a cost of living crisis, it is a shock to think Apple will increase iPhone prices for the second year running. Even US customers are now spending up to 15% more on average buying iPhones. This is because the $899 iPhone 14 Plus replaced the $699 iPhone 13 Mini, so the $799 iPhone 14 became the new entry point, while their underwhelming upgrades pushed more customers to the Pros.
So brace yourself for more iPhone price hikes in 2023. The good news? At least it looks like you will get USB-C in return…