Apple Has Smaller Profit Margin on iPhone X Due to Higher Component Cost

iPhone X Gestures - No Home button

Despite the high price tag, Apple is expected to have a smaller profit margin for the iPhone X. This is due to certain components including the 5.8-inch bezel-less OLED display and the TrueDepth camera system being significantly expensive.

As per the Wall Street Journal report citing an analysis by Susquehanna International Group, the total component cost of the iPhone X is estimated to be $581, up sharply from the total component cost of $248 for the iPhone 7. Despite the high increase in component cost, the base model of iPhone X is only around 50 percent more expensive than the iPhone 7 from last year.

It is definitely possible that Apple’s profit margins on the iPhone X are smaller when compared to its other new iPhones. The iPhone 8 and iPhone 8 Plus comes with modest upgrades compared to the iPhone X which features many pathbreaking new features and components like Face ID andTrueDepth camera system.

The 5.8-inch bezel-less OLED display would have also likely cost Apple a bomb since the company is only sourcing it from one supplier: Samsung. A previous report had claimed that Samsung was charging as much as $130 per OLED panel from Apple.

Nonetheless, it is difficult to ascertain the fair component cost of the iPhone X before it gets a teardown later this year after its availability. Remember that apart from the component cost, research and development expenses also make up a bulk of the device cost.

[Via Wall Street Journal]