Apple is separating the new smartphones into its usual low-cost versus high-cost categories, with big differences between the two models coming down to the camera, display, and battery life.
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iPhone XS Max Component Costs Estimated at $453 [Updated]
TechInsight's component cost breakdown suggests the iPhone XS Max display is the most expensive component in the device at $80.50, while the A12 chip and modems are the second most expensive, at $72.
Storage, priced at $64 is the third most expensive component, while other expensive parts include the cameras at $44 and the housing and mechanical components at $55.
The iPhone XS Max housing, display, battery, and memory are all more expensive than similar components in the iPhone X, largely due to the size increase in the new 6.5-inch device. The housing, for example, is larger and heavier, while the display is also larger.
According to TechInsights, Apple cut down on display cost in the iPhone XS Max by removing some 3D Touch components that were previously included in the iPhone X, but that does not appear to have affected 3D Touch functionality in the new iPhone XS Max.
In a statement provided to Reuters, Al Cowsky, who oversees the cost analysis at TechInsights, said Apple took out components worth up to $10, cutting the cost of the iPhone XS Max display to $80.
Apple is charging $100 more for the iPhone XS Max than it did for the iPhone X, with the device priced starting at $1,099, while the iPhone X, like the new iPhone XS, started at $999.
Component cost estimates from companies like TechInsights only took at the pricing of raw components and do not take into account other iPhone manufacturing expenses like research and development, software creation, advertising, and distribution.
TechInsights itself warns that its cost estimates are compiled using the information available at the time of the initial teardown, with "some assumptions" made where concrete data is not yet available. The company plans to continue to refine its estimate over time.
Last year, when the iPhone X was first released, TechInsights estimated the component cost at $357.50, a number that has now gone up to an estimated $395.44, so there can be quite a bit of variance in these early guesses.
While interesting, device cost estimates are not an accurate measurement of Apple's overall profit margin for the iPhone XS Max, nor do they offer a clear picture of the overall cost of creating a new smartphone.
Back in 2015, Apple CEO Tim Cook said that cost breakdowns for devices are not reflective of actual costs. "I've never seen one that is anywhere close to being accurate," he said.
Update: According to TechInsights, its analysis of the iPhone XS Max parts was inaccurate because Apple has not removed any 3D Touch components from the iPhone's display. The estimated cost of the iPhone XS Max is now $453 rather than $443.
We have revised our initial estimates of the component cost of the iPhone Xs Max from $443.00 to $453.00, based on new information about the 3D touch system. Our initial review of the phone indicated that some of the 3D components that were included in last year’s iPhone X had been removed, but further investigation revealed this not to be the case. We can confirm that the iPhone Xs Max includes the same Broadcom BCM15951 3D touch controller used in the iPhone X.The title of the post has been updated to reflect TechInsights' new pricing estimate.
This increases the Display cost from $80.50 to $90.50, for a total cost of $453.00.