An Unveiled Cost of an Apple
The recent price hike of Apple products has created heavily Sisyphean conversations, and as of the Trump Era, Apple’s Manufacturing Nexus has faced new predicaments, to say the least. Apple’s attempts at diversifying its production to lessen the burden of China reliance and increasing its reach in India have certainly paved a way but creating these devices still remains a burden. This article focuses on uncovering Apple’s expenses, the expected cost of an iPhone 16 Pro Max and estimating Apple’s production budget.
iPhone 16 Pro Max: Manufacturing Cost
According to an estimate provided by TD Cowen Research, Apple’s expense for manufacturing a 256 GB iPhone 16 Pro Max rests on $485. This is the maximum estimate; construction expenses include components, packaging, and assembly.
This marks an increase from the iPhone 15 Pro Max’s estimated $453 manufacturing cost, which means the new model is $32 more expensive to produce.
Absorption Policy: Apple’s Pricing Strategy
Apple continues to sell the iPhone 16 Pro Max at a starting price of $1,199, the same as what they listed the previous Pro Max model at, and this does not take into consideration the increase in manufacturing costs. This indicates that they are sustaining the increase in production cost, at least for the time being.
Most Expensive Components: A Tie at the Top
The costliest parts of the iPhone 16 Pro Max are its 6.9-inch Super Retina XDR display along with its rear camera assembly, both of which are estimated at $80. This makes up 16% of the total manufacturing cost. Apple’s iPhone 16 Pro Max has a triple camera system with a 48MP primary sensor, 48MP ultra-wide angle, and 12MP telephoto.
A18 Chip and 5G Modem: Significant Costs
Also expensive is the A18 chip, one of Apple’s most powerful systems on a chip, coming up to $45, which is 9% of the total cost, and the 5G modem, which contributes $28 to the manufacturing cost, which is around 6%.
iPhone 16: A Similar Cost Breakdown
The average iPhone 16 is expected to have a manufacturing cost of $416, which is $21 higher than the expected cost of the iPhone 15. The display components remain the most expensive portion of the iPhone 16, valued still at $65. Both the A18 chip and the 5G modem are equally priced at $45 and $28 as the Pro Max, but they do represent differing portions of the total cost (16% and 11%, respectively).
The Complex Economics of iPhone Production
In summary, the manufacture of the iPhone models entails so much more than simply assembling all the parts. Apple as a company has to think of all the intra- and inter-company expenditures in the optimization and production of iPhones, which Apple seems to be lower than need be. Apple has been incurring higher costs without raising the price for the iPhone 16 Pro Max. Despite the fierce rivalry faced in the market, they appear to be on a spending spree while selling the phones at a loss. The review shows that these products go through a large amount of monetary resources before they are finalized and sold, with the most important parts being the display and camera technologies.
