New Apple Exclusive reveals iPhone 15 price shock

15/11 Update below. This post was originally published on November 12

Apple introduced global price increases for the iPhone 14 range, with only China and the US escaping the increases. With a new iPhone 15 leak claiming, the cost is going up a lot more, and it looks like no one will escape the increases this time around.

In a new tweet, popular anonymous industry insider LeaksApplePro has revealed that Apple’s new flagship iPhone 15 Ultra will cost “significantly more to manufacture than the iPhone 14 Pro Max.” While he won’t give away how much this is, it opens the door for price hikes across the range.

For those unfamiliar with the iPhone 15 Ultra, it’s expected to replace the Pro Max in Apple’s next iPhone range. And “replace” is the crucial part of this.

Initially, the Ultra was tipped as a fifth iPhone 15 model, a new hero device with the very best Apple can make. It’s a strategy that suits the company’s flagship iPad Pro and MacBook Pro maxed-out models ($2,000 and $6,100, respectively). Apple’s best-performing M1 chip is also referred to as ‘Ultra’.

When further leaks revealed that the iPhone 15 Ultra is simply a rebranding exercise, fears of a major price hike subsided. Apple would just put in the iPhone 15 Ultra instead of an iPhone 15 Pro Max, and the lineup — iPhone 15, iPhone 15 Plus, iPhone 15 Pro and iPhone 15 Ultra – would be simpler than the X, XR, XS and Pro Max word salad of years past. But not so fast.

Update 14/11: LeaksApplePro has provided more information about the increased production costs for the iPhone 15 Ultra. In a conversation with me, the leaker says the new BOM will increase by up to $100.

While this may not sound “substantial anymore,” it’s important to remember that this is a cost to Apple, not the buyer. For comparison, last month Nikkei Asia unveiled iPhone 14 Pro Max components cost Apple $501, and pricing for the smartphone starts at $1099. That said, it’s overly simplistic to say that $1 on the component cost equates to $2 added to the asking price.

“The A16 [iPhone 14 Pro] is $50 more expensive than the A15 [iPhone 14 and 13] to produce,” explains LeaksApplePro, “but the price for the Pro is surprisingly still 999… Apple’s pricing policy is weird. If I had to guess, that might be a $150 raise (but that’s just a guess).

Another factor is how Apple decides to price the iPhone 15 range internationally. With the iPhone 14 range, Apple effectively subsidized prices in the US and China by raising prices for the rest of the world – in some countries by as much as 20%.

“It’s pretty common,” notes LeaksApplePro, “when your costs go up, you make the “compliant” market pay for the less compliant, so everyone’s happy.”

The problem is that this is unsustainable in the long run, making it all the more likely that the US and China will have to shoulder the increased costs for this generation. The silver lining? At least you still have enough time to save.

Update 15/15: LeaksApplePro has contacted me with more information. The leaker highlights Apple’s next-generation A17 chip as a major factor, noting that it will “definitely be more expensive”.

This is an interesting twist because 1. The A16 was from the iPhone 14 Pro twice as expensive like 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, the primary chip supplier.

“It was originally rumored in the industry that the price of TSMC would increase next year, ranging from about 6% to 9% as per 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%,” explains TSMC. “However, the latest rumor is that Apple, a major customer, is refusing to raise the price.”

Given the strain on Apple’s supply chain recognized last week, there is a good chance that a compromise has been reached between the two sides. However, this issue continues to affect iPhone 14 Pro and Pro Max shipments, with a warning from Apple saying “We are now expecting lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated, and customers will experience longer wait times. experienced 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 35x more expensive than the stainless steel used for the iPhone 14 Pro and Pro.

Titanium is as strong as stainless steel at only 40% of the weight, an important factor when the iPhone 14 Pro Max is one of the heaviest plate phones in the world at 240g. Apple could also compromise and double the strength of the chassis while making the phone lighter than its predecessor. Something that would help sell the “Ultra” moniker.

Leaks emerged last month that the iPhone 15 Ultra would have notable upgrades such as dual front-facing cameras and a titanium chassis, a material that is about 35x more expensive than the Pro Max’s stainless steel. So the latest information from LeaksApplePro makes a lot of sense.

While higher production costs don’t always lead to price increases, brace yourself if they cost “significantly more”. Apple has margins to preserve. In addition, the company has a clear pricing structure and there is not one model that stands out far above the rest – there are always increases. So if the UItra goes up, the rest of the range will have to close the gap to match it.

Yes, at a time of extreme inflation and a cost-of-living crisis, it’s a shock to think that Apple will raise iPhone prices for the second year in a row. Even US customers now spend an average of up to 15% more on 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 disappointing 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’re getting USB-C in return…

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