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Apple to Maintain iPhone 12 Price and Margins by Pressuring Supplier Costs
Apple, which reportedly is not going to ship a charger or ear phones for the iPhone 12 is also apparently squeezing component suppliers for the upcoming iPhone 12 lineup to help offset increased costs for new 5G technology and minimize the need for price increases across the flagship lineup, according to a new research note from analyst Ming-Chi Kuo. Kuo says adoption of Sub-6GHz 5G technology will increase Apple's costs by $75–$85, while millimeter wave technology will incur a $125–$135 cost for Apple, so the company is cutting costs on other components wherever it can. Kuo believes battery board suppliers will see the biggest cost trimming as Apple moves to a simpler and smaller design with fewer layers. The hybrid hard and soft battery board for the iPhone 12 will reportedly be 40–50% cheaper than the equivalent part in iPhone 11, although this component is likely a small contributor to Apple's overall costs.
Kuo says Apple will push the envelope even more with the "iPhone’s" lineup in 2021, adopting a purely soft board design that will shave off an additional 30–40% compared to the 2020 board price. Apple has also been putting pricing pressure on its circuit board suppliers for the AirPods, with the average price of soft and hard boards in the AitPods2declining by 25–35% since the first half of the year. Current suppliers will face even more issues when the AirPods 3 launch in the first half of 2021, according to Kuo. The next-generation earphones will follow the AirPods Pro in adopting an integrated system-in-package (SiP) design rather than the surface-mount technology (SMT) found in the current AirPods 2.
Apple, which reportedly is not going to ship a charger or ear phones for the iPhone 12 is also apparently squeezing component suppliers for the upcoming iPhone 12 lineup to help offset increased costs for new 5G technology and minimize the need for price increases across the flagship lineup, according to a new research note from analyst Ming-Chi Kuo. Kuo says adoption of Sub-6GHz 5G technology will increase Apple's costs by $75–$85, while millimeter wave technology will incur a $125–$135 cost for Apple, so the company is cutting costs on other components wherever it can. Kuo believes battery board suppliers will see the biggest cost trimming as Apple moves to a simpler and smaller design with fewer layers. The hybrid hard and soft battery board for the iPhone 12 will reportedly be 40–50% cheaper than the equivalent part in iPhone 11, although this component is likely a small contributor to Apple's overall costs.
Kuo says Apple will push the envelope even more with the "iPhone’s" lineup in 2021, adopting a purely soft board design that will shave off an additional 30–40% compared to the 2020 board price. Apple has also been putting pricing pressure on its circuit board suppliers for the AirPods, with the average price of soft and hard boards in the AitPods2declining by 25–35% since the first half of the year. Current suppliers will face even more issues when the AirPods 3 launch in the first half of 2021, according to Kuo. The next-generation earphones will follow the AirPods Pro in adopting an integrated system-in-package (SiP) design rather than the surface-mount technology (SMT) found in the current AirPods 2.
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