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iPhone 14 Pro Max only costs Apple $464 to manufacture

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The blended bill of materials (BoM) cost for Apple's iPhone 14 Pro Max with 128GB of storage is $464, a 3.4% increase compared to the previous year's iPhone 13 Pro Max. The main drivers of the cost increase were the display and processor, which includes Apple's A16 bionic processor, third-party 5G chips, and camera. While the overall increase in cost was slight, the share of Apple's self-designed component costs has increased to 22%, up from the previous model. Apple's custom-designed components for the iPhone include the A16 bionic processor, PMIC, audio, connectivity, and touch control. Image credit: Apple Inc. The A16 bionic processor features one billion more transistors than the A15's 15 billion, and it cost $11, or a 6.7% increase, due to the new 4nm process used. In contrast, the cost of the collection of chips in the cellular category fell to 13% in the iPhone 14 Pro Max, down from 14% in the previous model. This decrease was attributed to a fall in component prices as 5G cellular technology rose in popularity. Qualcomm, Qorvo, Skyworks, and Broadcom were among the main iPhone 14 Pro Max cellular suppliers.

Counterpoint Research's Shenghao Bai estimates that the blended materials cost for the iPhone 14 Pro Max with 128GB of storage was $464, based on the mmWave variant's share of the product mix at the end of 2022, which he assumed to be about 44%. While Apple doesn't disclose production costs on a per-device basis, it does report its overall products' gross margin. In Q1 2023, for instance, Apple reported that its products' gross margin was 37%, a number that has historically been very stable for the company, with only minor fluctuations. Image credit: Digital Trends Other notable changes to the iPhone 14 Pro Max include the new 48MP rear camera and the always-on display feature. Although prices for certain components have gone down, the overall "processing" category, which includes the A16 bionic chip, now accounts for 20% of the total materials cost, up from the previous year. Samsung supplied the display panels for the iPhone 14 Pro Max. The BoM for the mmWave 5G variant of the iPhone 14 Pro Max costs about $474, while the BoM for the sub-6GHz model comes to about $454.

It's important to keep in mind that the cost analysis only captures the cost of components and doesn't include other production costs, such as assembly, packaging, or distribution. Apple works closely with its suppliers and often finalizes component costs well ahead of time. Nonetheless, these cost fluctuations provide insight into how they impact Apple's pricing for consumers. Despite the slight cost increase, the iPhone 14 Pro Max is priced the same as the previous model.

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Published to Apple Scoop on 1st March, 2023.