Revealed: The true cost of the iPhone 16

Macworld

The U.S. investment bank TD Cowen has published a report (via AppleInsider) breaking down the individual parts of the iPhone 16 handsets and analyzing their respective costs. This bill of materials, or BOM, reveals the device’s pure manufacturing costs. (There are obviously other expenses, from R&D to marketing and shipping. But this is how much it costs to make.)

Read on to educate yourself. With this knowledge you can amaze your Android-using friends and, who knows, perhaps even convince them to switch to the iPhone. Well, probably not. But at least you’ve put the facts on the table.

iPhone 16 costs more than iPhone 15… but not by much

The Japanese daily newspaper Nikkei, which we quoted [translation] last year when discussing the manufacturing costs of the iPhone 15, was surprised at the time that significant increases in production costs had not caused the sale price to go up. The paper predicted that Apple would have to raise prices when it launched the iPhone 16… but fortunately, the authors were wrong with this prediction. As we now know, Apple is sticking to the same price for another year.

This is despite the fact that production costs have risen again, albeit only marginally. For example, from $395 for the standard iPhone 15 to $416 for the iPhone 16: an increase of $21 or 5 percent.

The single largest expense in the BOM is the display at $65. But the largest relative cost increase is the RAM, which to support Apple Intelligence has been bumped from 6GB to 8GB–and this means a whopping 89 percent price rise, from $9 to $17. The jump from the A16 to the A18 chip, meanwhile costs an extra $10, and the new controls (Camera Control and the Action button) only $3 in total. And several components have actually gone down in price, including the display, which cost $3 more in the previous generation.

Here’s how the costs shake out for the standard models this year and last year:




Material costs for the iPhone 16 and iPhone 15.TD Cowen

What about the iPhone 16 Pro Max?

The iPhone 16 Pro Max also costs more to manufacture than its immediate predecessor, but again the increases are manageable. First place in the list of costs is shared by the rear camera and the display, at $80 each, while RAM is again the largest relative increase. It’s gone up by 41 percent, from $12 to $17, even though the amount of RAM hasn’t gone up; the 15 Pro Max also came with 8GB. Rather, the price rise this year is due to the technology: LPDDR5 was used in the 15 Pro Max whereas the faster LPDDR5X appears in the 16 Pro Max.




TD Cowen

Overall, the iPhone 16 Pro Max is $32 more expensive to manufacture than the iPhone 15 Pro Max, with TD Cowen attributing 40 percent of this to inflation and 60 percent to new components.

How reliable are these numbers?

Before you rush off to boast about Apple’s generosity in keeping prices level despite rising costs, a word of warning: not everyone agrees on the numbers. In fact, TD Cowen’s estimates differ significantly from those made by Nikkei and Fomalhaut Techno Solutions.

For example, Nikkei and Fomalhaut estimate the display in the iPhone 15 Pro Max at $115, compared to TD Cowen’s $75. The difference is even greater for the chip: TD Cowen estimates $40, Nikkei a whopping $130. Overall, Nikkei’s estimate for the iPhone 15 Pro Max is 23 percent higher than TD Cowen’s.

The disparity is probably due to the different backgrounds of the companies: TD Cowen is an investment bank, while Fomalhaut Techno Solutions specializes in taking apart electronics, tracing the individual components back to their manufacturers, and then estimating their price.