Apple launched iPhone 16 at same price as iPhone 15, but its real cost is higher

Apple recently launched the iPhone 16 series in India at a starting price of Rs 79,900. The launch price is similar to that of its predecessors, the iPhone 15 or even the iPhone 12. While this move seems to benefit buyers, analysts point out that while the launch price of the iPhones remains unchanged, the actual cost of producing the iPhone 16 is notably higher than that of the iPhone 15.
According to a recent report by TD Cowen, the manufacturing costs for the iPhone 16 series have risen due to increased component prices and more advanced technology that Apple incorporated into it. The report states that the iPhone 16’s more advanced features, especially in the Pro and Pro Max models, are partly responsible for the increased production costs. TD Cowen’s analysis reveals that the bill of materials (BOM) for the iPhone 16 Pro Max is around $485 (approximately Rs 40,739), compared to $453 (around Rs 38,051) for the iPhone 15 Pro Max, a difference of $32. Similarly, the iPhone 16 base model costs $416 to manufacture, $21 more than the iPhone 15, which had a BOM of $395.
Analysts state that these increases are primarily due to specific components that have become more expensive in the iPhone 16 lineup. For instance, the most costly parts of the iPhone 16 Pro Max are tied between its display and the rear camera module, each priced at around $80. The rear camera module, in particular, saw a significant cost jump, increasing by $10 compared to the iPhone 15 generation.
Additionally, memory and storage upgrades in the iPhone 16 series have contributed to the overall expense. The cost of memory in the iPhone 16 Pro Max increased from $9 for 6GB in the iPhone 15 Pro Max to $17 for 8GB in the new model. Similarly, storage components rose by $5, pushing their cost to $22.
The increase in production costs is also attributed to the new features the iPhone 16 series brings to the table. The iPhone 16 Pro models are equipped with Apple’s new A18 chip, which costs around $45 to produce, compared to $35 for the A16 chip used in the iPhone 15 series. The addition of advanced features like the Camera Control and Action Buttons has further driven up costs, adding an estimated $3 to the sensor module.
However, despite the increase in costs, Apple has kept the launch price the same, absorbing the expenses to maintain pricing stability in a competitive smartphone market. This is why consumers see no direct impact on the sticker price. However, the report suggests that while prices are stable for now, the increasing production expenses could eventually lead to higher prices for future models, or Apple might seek other cost-cutting measures down the line.