The latest teardown report of Apple's iPhone 16 series reveals that due to rising costs of certain components, the production cost of the iPhone 16 series has increased compared to the iPhone 15 series, though the average increase is less than US$30.
Citing a report by TD Cowen, Apple Insider reported that the total cost of producing a 256GB iPhone 16 Pro Max, including components, packaging, and assembly, is about US$485, US$32 higher than the US$453 production cost of the iPhone 15 Pro Max. The bill of materials (BOM) for the 256GB base model iPhone 16 is US$416, US$21 more than the US$395 for the iPhone 15.
For the iPhone 16 Pro Max, the report notes that the most expensive components are the display and the rear camera module, each costing US$80, and together making up 16% of the BOM. The camera module saw the largest price increase, rising by US$10 compared to the previous generation. Additionally, memory and storage costs rose by US$5, bringing their respective costs to US$17 and US$22.
With the 256GB iPhone 16 Pro Max retailing for US$1,199, the estimated gross profit is US$714, resulting in a gross margin of 59.5%. By comparison, the iPhone 15 Pro Max had a gross profit of US$746 and a gross margin of 62.2%. This shows that Apple is sacrificing some of its profit to keep the retail prices the same in the face of rising production costs, to maintain its competitive edge in the iPhone market.
For the base model iPhone 16, the display remains the most expensive component, costing US$65 and accounting for 16% of the total cost. The price of memory has increased significantly, with the 6GB memory in the iPhone 15 costing US$9 and the 8GB memory in the iPhone 16 costing US$17. The processor cost has also risen by US$10, with the A16 chip costing US$35 and the A18 chip costing US$45. Additionally, new features like the "Camera Control" and "Action" buttons on the iPhone 16 have raised the total cost of sensors by US$3.
The report also notes that Apple has not changed its production estimates for the iPhone in the second half of 2024. The third quarter is expected to see around 45 million units produced with 80 million in the fourth quarter. Of these, approximately 65 million units will be from the iPhone 16 series, with the iPhone 16 Pro and Pro Max models accounting for 66% of production, a higher share than the 58% for the iPhone 15 Pro series.
