The production cost of the iPhone XS Max is less than half of its advertised price
Apple unveiled three iPhones earlier this month, iPhone XS Max, iPhone XS, and the iPhone XR starting at $1099, $999, $749 respectively. The iPhone XS Max is Apple’s most expensive iPhone to date, with the base model 64 GB variant starting at $1099 and the maxed-out version iPhone XS Max 256 GB standing at a whopping $1449.
This is currently the most expensive smartphone on the planet. Without a doubt, Apple has positioned itself as a luxury brand in the eyes of its consumers. Interestingly, the Ontario-based firm TechInsights took a look inside the 256 GB variant of the iPhone XS Max and found out its actual price after the teardown and the results were astonishing.
According to the firm, the production cost of the iPhone XS Max is less than half of its advertised price. It costs Apple $443 to make the iPhone XS Max 256 Gb while its advertised price is $1249, therefore earning a profit of $806. It goes without saying that the BOM (bill of material) does not consider, the massive amount spent at R&D which goes into the making of the smartphone. Unlike, other companies Apple manufactures most of its phone’s internals in-house, while other smartphone companies rely on QUALCOMM’s Snapdragon processors. This plays a crucial factor in the company’s unprecedented profit margins. According to the tear-down by TechInsights the OLED display was the most expensive part of the iPhone XS Max:
- OLED display – $80.50
- A12Bionic chip – $72
- Camera – $44
TechInsight also did a similar analysis on the now discontinued $999 iPhone X last year. Their tear-down estimated iPhone X’s cost around $375.50. Last year’s iPhone X display was also the most expensive part in the smartphone and cost the company close to $77.27. Considering this year’s iPhone XS Max 6.5-inch screen is significantly larger while costing only $80.50 compared to last year’s iPhone X 5.5-inch screen shows that Apple has done well to maximize its profits. This was also attributed to the fact that Apple was able to remove “some components” related to 3D touch with this year’s iPhone XS Max display. Furthermore, the inclusion of the new 7nm A12 chip also played a part in the increase in price.
You can see a side by side production-cost comparison of the iPhone X and iPhone XS Max in the graph given below:
Despite the new price tag of $1099, it seems that the consumers are not bothered about it, since the sales of iPhone XS MAX are through the roof. It appears that the iPhone XS Max has outsold the iPhone XS by over four times since its launch.