Apple analyst Ming-Chi Kuo claims that Apple is cutting costs in other areas with the iPhone 12 lineup and squeezing its suppliers for better component pricing so that it does not have to increase the prices of its new iPhones this year.
The addition of sub-6GHz 5G will lead to an increase in cost by about $75-85 per iPhone for Apple, while for mmWave 5G, the additional cost will be around $125-$135. Since the company does not want to increase the prices of its products, it is bargaining with its suppliers for a better deal. As per Kuo, one area where Apple is going to substantially save on cost is by going with a simpler and smaller battery board design with fewer “soft and hard” layers. The hybrid hard and soft battery board for the iPhone 12 will be about 40-50% cheaper than its iPhone 11 counterpart.
Apple will further reduce the component cost by an additional 30-40 percent for the battery board by switching to a soft board design with the iPhone 12s lineup in 2021. Apple has applied similar bargaining pressure on its AirPods circuit boards supplier that has led to a fall in the price of the soft and hard boards by 25-35 percent from the beginning of this year. The company is also expected to switch to a new SiP (System-in-Package) design with the AirPods 3 in early 2021 that will put additional pressure on its suppliers and increase manufacturing complexity.
Apple is making some major improvements to its iPhone 12 lineup across the board this year that will lead to a notable increase in component costs. The company is expected to launch four new iPhone 12 models this year and use OLED displays on all of them. All the iPhone 12 models will also feature 5G connectivity, with the high-end iPhone 12 Pro Max also packing a LiDAR sensor for AR purposes.