iPhone 8 Component Costs Estimated to Start at $247.51

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Sep 25, 2017.

  1. MacRumors macrumors bot


    Apr 12, 2001

    The iPhone 8 and iPhone 8 Plus are more expensive for Apple to manufacture than the iPhone 7 and iPhone 7 Plus, according to component cost estimates research firm IHS Markit shared today with Bloomberg.

    An entry-level iPhone 8 with 64GB of storage costs Apple an estimated $247.51 in raw materials, an increase of almost $10 compared to the $237.94 it cost Apple to make last year's 32GB iPhone 7.

    The 64GB iPhone 8 Plus costs an estimated $288.08, up from $270.88 for the iPhone 7 Plus.

    Image from iFixit's recent iPhone 8 teardown

    To compensate for the increased cost, Apple charges $699 for the 64GB iPhone 8 in the United States, up from the $649 starting price it charged for the 32GB iPhone 7 in 2016. The iPhone 8 Plus is priced starting at $799, up from $769 in 2016.
    According to Bloomberg, some of the most expensive components in the iPhone 8 and 8 Plus include the screens and the mechanical enclosures. Apple's new glass-bodied devices are built around a strong internal frame and include new displays with True Tone support.

    Compared to iPhone 7 pricing, the wireless charging module increases costs by $2, the A11 Bionic chip costs $5 more, and the larger 256GB storage options increase prices by $6.

    IHS's component costs are only estimates of what the iPhone 8 and the iPhone 8 Plus cost to manufacture, and sometimes those estimates are not spot on. For example, while IHS told Bloomberg cost $237.94 to manufacture an iPhone 7 in 2016, its initial estimates following the iPhone 7's release were at $219.80.

    These estimates also only look at raw component costs and do not take into account other iPhone manufacturing expenses like research and development, software creation, advertising, and distribution, so this information, while interesting, is not an accurate measurement of Apple's profit margin for the iPhone 8 and the iPhone 8 Plus.

    Back in 2015, Apple CEO Tim Cook said that cost breakdowns are generally "much different than the reality." "I've never seen one that is anywhere close to being accurate," he added.

    Article Link: iPhone 8 Component Costs Estimated to Start at $247.51
  2. AngelOfSoul macrumors member

    Feb 23, 2013
  3. KingOfStuff macrumors regular


    Jul 8, 2013
  4. macbeta macrumors regular


    Nov 13, 2009
    Always interesting that 7$ to 10$ on their end equals 200$ - 250$ on the consumer end.
  5. Act3 macrumors 68000

    Sep 26, 2014
    Cost goes up $18 so Apple sticks it to their faithful for an extra $50.
  6. wikiverse macrumors 6502a

    Sep 13, 2012
    These figures don't take into account R&D, Software, Assembly, Packaging, Shipping, Advertising, or Retail Store costs.
  7. garirry macrumors 68000


    Apr 27, 2013
    Canada is my city
    Apple: Oh no! The profit is only almost twice the production cost! The horror!!!!

    (yes I know most of the revenue goes to R&D it's a joke)
  8. Brandhouse macrumors 6502

    Aug 6, 2014
    Agree, here we go again. Chime in, 'it costs so little why are we being charged so much?!
  9. HardRain macrumors regular

    Mar 31, 2012
    There is also the ever dropping cost of innovation. Since everything now is minor improvements the overall cost of research and development is dropping. Then there is the 4 year old design. The cost of this device should have dropped.
  10. Mlrollin91 macrumors G5


    Nov 20, 2008
    Ventura County
    It was only a $50 dollar increase for the 8, $30 for the 8Plus and both include double the storage.
  11. HardRain macrumors regular

    Mar 31, 2012
    If Apple wasn't making record profits your point might be valid. Don't worry buddy, Apple are doing fine..
  12. Kaibelf macrumors 68020


    Apr 29, 2009
    Silicon Valley, CA
    Almost as interesting as the way people assume a $250 bill of materials somehow should produce free labor, development, marketing, retail read estate, and unpaid sales associates.
    --- Post Merged, Sep 25, 2017 ---
    Record profits by volume, but margins are about on par with history. No, they shouldn’t cut their margins as more people buy their products over time.
  13. ZCT macrumors 6502

    Sep 15, 2014
    Minneapolis, MN
    Ah, got to love that time of year when some geeks price up components and 'journalists' report it as news.

    It doesn't really matter if this number is $50 or $5000. There are so many moving parts in putting out a new phone and so many expenses, the individual component total cost is completely irrelevant, even if it were accurate.
  14. deany, Sep 25, 2017
    Last edited: Sep 25, 2017

    deany macrumors 68030


    Sep 16, 2012
    North Wales
    $699.00 cost of iPhone 8

    $279.60 Gross Profit @ 40% approx

    $171.89 R&D advertising etc

    $247.51 Raw materials
  15. warden macrumors member

    Aug 28, 2013
    All of the above - plus the simple cost of being a business i.e. making profit to fuel growth. In other words, nobody should expect that the development, marketing, and sales costs (in addition to the cost of components) should actually total the overall retail price of the object. Buyers would feel slightly cheated if there was a large difference between these figures, sure - although I suppose we don't know for sure what other costs are being factored in. But, in the end, we won't really know with confidence how much the whole package costs Apple. So buyers should just decide whether the cost justifies the value they are getting from the object rather than trying to calculate the cost from the seller's end.
  16. redheeler macrumors 603


    Oct 17, 2014
    $50 increase isn't too bad considering you get double the storage from the prior model. I'd rather they do that than keep selling 32 GB at last year's price and have the next tier be 128 GB.
  17. splogue macrumors 6502


    Aug 1, 2008
    RTP, NC
    These cost breakdowns seem completely pointless to me. They don't include the cost to develop the processor, for example, which is probably the largest cost to create the new phone. Second largest is probably the development and testing of the OS, which also isn't included. And then the cost for the part manufacturing assumes quantity discounts in the millions of units, so it isn't like you could just somehow buy the parts and build one for this price.

    Given that, I don't really see what this tells us. I guess the part manufacturing cost delta from last time? But, is that interesting to people?

    Not arguing - I'm honestly curious. I think this every time they publish one of these. I'm sure someone wants to see it, I'm just not sure why.
  18. Vanilla35 macrumors 68030


    Apr 11, 2013
    Washington D.C.
    Well it's an increase of $13-16 total ($10 for phone, $3-6 for 64GB storage vs. 32GB), and that equated to an increase of $50 to the consumer. That's not far off from the normal apple tax. This article actually explained the breakdown, and I'm ok with the extra $50, based on it.

    $200 more for the X on the other hand is not OK in my book. The crazy thing about it, is that Apple actually makes less money off the iPhone X (margins).
  19. trifid macrumors 65816


    May 10, 2011
    256gb $6 wow.

    Incredible how Apple tried to keep 16gb default on iphones for almost a decade while everyone else was offering more.

    I guess ssd prices were so insanely low that Apple couldn’t keep greedgate any longer.
  20. joesegh macrumors 6502

    Jun 17, 2009
    New Jersey, USA
    I think the point is that it's an incomplete and misleading numbers. You'll note that Apple isn't claiming some 60+% margin on iPhones. The people who write these reports also have no idea what actual unit costs Apple was able to negotiate, further making it pretty pointless metric, but one that will generate some clicks.
  21. flat five, Sep 25, 2017
    Last edited: Sep 25, 2017

    flat five macrumors 603

    flat five

    Feb 6, 2007
    huh? a huge chunk of the phone's cost goes towards labor/construction..

    a very general estimate when building something is:
    1/3 materials
    1/3 labor
    1/3 admin & profit (profit generally being around 20%)

    do that with this bill of materials of $247 and you come up with $741... Apple is selling it at $699..
    (or $864 on the plus with Apple selling at $849)

    is the cost high to the buyer? sure..
    but Apple isn't overcharging here.. at least, not if comparing to how anybody else is running a profitable business.

    you really think Apple is profiting $500 per phone?
    maybe more like $150

    and with a slick production / organized supply chain.. they may be able to pocket some more cash per phone.. but not because of greed so much.. more because they're smart builders.
  22. rafark, Sep 25, 2017
    Last edited: Sep 25, 2017

    rafark macrumors 6502a


    Sep 1, 2017
    I get they very well deserve their profit but $500 is excessive and downright an insult to the customers, maxime considering they produce in mass (read: millions) and as a consequence prices should decrease and not increase.

    And I know there are other associated costs but they're nowhere near half $500.
  23. macTW Suspended

    Oct 17, 2016
    “How horrible!! Apple makes good profit!! Shame on them”

  24. iabacus macrumors member


    Sep 26, 2011
    I bit the bullet and got an 8+, besides the screen tech I couldn't justify the X for features. Plus I signed up for the yearly Apple upgrade and wanted to make sure the timing was good for next year (not waiting for supplies of the x to come through in April and always being 6 months behind on upgrades the following years)

    Drives me crazy when people see the build price and complain. Overhead? Its a thing. Though in critics defense Apple is stockpiling money by the hundreds of billions.
  25. macTW Suspended

    Oct 17, 2016
    Sorry you don’t like success. I hear Samsung has nice phones.

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