Rising Costs: iPhone 18 Pro Production Expenses to Increase by 38%

With the current memory shortage impacting production costs, the upcoming iPhone 18 Pro models from Apple are expected to be more expensive to manufacture. A new report from the supply chain sheds light on the extent of the cost increase.

Following recent price hikes on various products except for the iPhone, it seems likely that Apple is saving the big pricing change for the release of the iPhone 18 Pro in September. While the consensus is that prices will rise, there are differing opinions on the magnitude of the increase.

According to TrendForce, the base 256 GB iPhone 18 Pro model is projected to cost Apple 38% more to produce compared to last year’s iPhone 17 Pro, primarily due to higher memory prices. The report highlights the significant rise in memory costs as a share of the total Bill of Materials (BOM) cost, surpassing 40% in the near future. This shift marks a departure from the past dominance of the application processor (AP) and display as cost drivers.

An analysis of the 256 GB iPhone Pro models over the past two generations shows that memory’s share of total BOM cost has risen dramatically — from around 10% a year ago to approximately 34% in 3Q26, and is expected to exceed 40% in 1H27. This marks a fundamental shift, where the application processor (AP) and display were once the dominant cost drivers.

TrendForce

Furthermore, there are concerns that Apple’s costs could continue to rise in 2027, potentially leading to further price increases for the iPhone 18 Pro and iPhone 18 Pro Max. While Apple aims to avoid mid-cycle price adjustments, it may need to adjust pricing to offset escalating costs. The company is likely to absorb as much of the increase as possible without compromising profitability.

TrendForce suggests that Apple might mitigate these costs by raising prices of older iPhone models. However, the demand for existing models like the iPhone 17 and iPhone 17e remains high, posing a challenge for managing costs across the product line.

Scarcity as a Key Concern

Supply chain expert Ming-Chi Kuo has raised concerns about potential shortages of the iPhone 18 Pro and iPhone 18 Pro Max, although he disputes specific claims. Reports of memory shortages causing production delays have surfaced, indicating potential challenges in meeting demand for the upcoming iPhone models.

Kuo’s analysis contradicts claims of significant inventory accumulation, emphasizing the strong collaboration between TSMC and Apple in managing the supply chain. While memory supply constraints are acknowledged, the impact on production remains uncertain.

In other words, tight memory supply is real. But my understanding is that there has been no dramatic scenario in which TSMC first built up US$1 billion of WIP and then had to wait for memory to arrive before packaging could proceed. TSMC and Apple are both known for world-class execution, and such a dramatic development would be unusual given how closely the two companies coordinate their supply chains.

The potential bottleneck in production could lead to delays in meeting consumer demand for the new iPhone models. While Apple may have scaled back hardware shipment plans due to memory shortages, the extent of this adjustment remains unclear. Efforts are underway to mitigate supply chain disruptions and ensure timely delivery of the iPhone 18 Pro and iPhone 18 Pro Max.