A teardown report from Japan reveals that the total parts cost of Apple’s (AAPL-US) latest iPhone 14 flagship model is a record high at around 20% higher than iPhone 13. The iPhone 14 Pro series has few new features and is powered by Apple’s own A16 processor, continuing its strategy of ultra-high performance products, but prices in the US and elsewhere remain the same, thus squeezing profitability.
The Nihon Keizai Shimbun, with the help of Fomalhaut Techno Solutions, disassembled three models of the iPhone 14 series and estimated the price of the parts.
The Nihon Keizai Shimbun, with the assistance of Fomalhaut Techno Solutions, disassembled three models of the iPhone 14 series and estimated the price of the parts.
According to Fomalhaut’s estimate, the total parts price for the iPhone 14 Pro Max is approximately US$501, more than US$60 higher than last year’s iPhone 13 Pro Max. Since its launch in 2018, the iPhone flagship Max model has cost around US$400-US$450, but this time it is more than US$60 higher. Both the cost of parts and the total amount of parts have risen by the largest amount since 2018.
While iPhone prices in Japan have risen every year, the smallest iPhone, the iPhone 14 Pro Max, remains at the same price in the US as its 2018 counterpart, at $1,099. The increase in component prices is not passed on directly and is the main driver of profitability pressure.
The increase in the cost of the iPhone 14 Pro series is primarily related to the “A16 Bionic” chip. The A16 Bionic uses a state-of-the-art 4nm process, which is currently only available from TSMC (2330-TW) and Samsung Electronics.
According to Fomalhaut, this highlights Apple’s strategy of “not being able to differentiate with new features, so we have to differentiate with high-performance devices”.
Among the other components, the CMOS used in iPhone 14 is a Sony product, and of the three lenses on the back of iPhone 14 Pro, the CMOS used for the main lens is 30 percent larger and costs about 50 percent more, at $15. Thanks to the new CMOS, the main lens of the iPhone 14 Pro series has been increased to 48 million pixels.
The OLED panel is made by Samsung Electronics; the mobile communications chip is from Qualcomm-US, and the power management chip (PMIC) is Apple’s own product. Apple spent $600 million in 2018 to acquire the power management chip business of British chipmaker Dialog.
In terms of total parts for iPhone 14 Pro Max, by region, the US accounts for 32.4 percent, South Korea 24.8 percent, Japan 10.9 percent, China 3.8 percent, Taiwan 7.2 percent, and others (unknown) 20.9 percent.
For iPhone 13 Pro Max last year, the US accounted for 22.6%, South Korea for 30.4%, Japan for 14.5%, China for 4.5%, Taiwan for 8.4% and others (unknown) for 19.6%.
The iPhone is mainly assembled and manufactured by Hon Hai, mostly in mainland China. However, due to the confrontation between the US and China, the number of OEM countries is becoming increasingly diverse and some Apple products are also being produced in India and South East Asia. As a result, the source of parts dispatch may also change in the future as the supply chain is re-evaluated.
The iPhone 14 for the US market is equipped with an emergency contact function using satellite communication, but Fomalhaut did not find any satellite communication-related components in this disassembly, presumably using software technology to control the existing radio waves.
