As per research firm IHS Markit, the iPhone 8 and iPhone 8 Plus are slightly more expensive to produce for Apple when compared to their predecessor. The estimated component cost of 64GB iPhone 8 comes to around $247.51, an increase of almost $10 from the iPhone 7.
For the iPhone 8 Plus, the increase in component cost is slightly higher at $18.08, up from $270.88 for the iPhone 7 vs $288.08. To make up for the increased component cost, Apple also increased the prices of the iPhone 8 and iPhone 8 Plus by $50 each which more than makes up for the increase in production cost.
As for the increase in component cost, IHS Markit analyst Wayne Lam says it can be attributed to the camera, processor, and memory. The jump from 32GB to 64GB of storage on the base variant of the iPhone 8 costs Apple an additional $6 per unit, while the new 6-core A11 Bionic chip is about $5 more expensive than the A10 Fusion chip found inside the iPhone 7.
“The added value went to memory, camera, and processing. That’s where we can materially identify where they’ve improved the overall product, and hence why they can command a higher price for it,” according to Wayne Lam, an analyst at IHS.
The displays on the iPhone 8 and iPhone 8 Plus were among their most expensive components followed by their metal chassis, both of which have been upgraded over the iPhone 7. The inclusion of new components for wireless charging for the iPhone 8 has only led to a $2 increase in power-management related components.
Remember that production costs are only one part of the equation and do not take into account the millions of dollars spent by Apple on R&D and software for its new iPhones. Then, there are also the expenses related to distribution and after-sales support, all of which must be factored into the price of the handset.
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