Apple Inc (NASDAQ:AAPL) shares are down Monday on the heels of a Jefferies downgrade due to supply chain issues and higher memory costs.
A report from Trendforce showed that the iPhone 18 Pro — set to be unveiled at Apple’s next event on Sept. 9 — will come with 38% higher costs compared to the iPhone 17 Pro, as reported by 9to5Mac. That’s because memory costs have gone up three times compared to the last model.
Memory costs were around 10% of the overall phone cost last year, but that rises to 40% for the upcoming model.
Apple expects to absorb some of the costs on the phone to cushion the hit to consumers, but doing so would lower margins on the popular smartphone.
Apple’s iPhone 18 is set for release on Sept. 18.
Analyst Predicts $125 Price Hike
Deepwater Asset Management Managing Partner Gene Munster predicts that Apple will raise the cost of the iPhone by around $125 or 15%.
Munster remains bullish on Apple and the iPhone unit demand. Most customers, he argues, will pay the large cost through a monthly subscription with Apple or their cellphone provider. This means the 15% higher cost for the iPhone 18 would be only a couple dollars per month.
Munster also said Apple is likely to shift part of its product cycle to the next quarter, which could mean that consumers looking to upgrade have to buy the higher-priced models, helping boost average sale prices of the iPhone 18.
Features Vs. Price Tag
While many customers are likely looking to upgrade their iPhone, the focus could be even more on what added features and upgrades are on the phone compared to past models given the higher consumer cost.
It is highly unlikely at this point that the iPhone 18 isn’t priced at least somewhat higher than the iPhone 17.
Another option for Apple would be to raise the prices on the premium models. Those models may be the only ones available at launch in September. The company could subseqently keep the prices the same in the following quarter.
Apple Keeps Beating Estimates
Apple reported third-quarter (Q3) financials results on July 30. The company beat analyst estimates for both revenue and earnings per share for a 14th straight time.
Revenue was up 16% year-over-year to mark the strongest June quarter ever.
The technology giant continues to set quarterly records for overall revenue, iPhone revenue and installed base of active devices.
Expectations for the September quarter (fourth quarter) could come in lower than estimates for past quarters based on minimal details for the iPhone 18. The fourth quarter could see stronger-than-expected results and set up for a strong 2027 based on Munster’s take on the iPhone 18 along with other x-factors like the AI growth for the company.
Photo by 19 STUDIO via Shutterstock
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