Apple Earning 180% Profit From Every iPhone 12; But Costs 21% More Than iPhone 11 (BoM Details)

In a recent revelation, Apple iPhone 12 found to be 21 percent more expensive to produce compared to the iPhone 11. 

Why Is The Increase In Production Cost For iPhone 12?

The new iPhone 12’s Bill of Materials (BOM) total comes to $431, as per a recent report by Counterpoint Research.

This raised cost of production is caused by Apple’s newer parts that went into the phone, including the 5G-components and the new A14 Bionic chipset.

The report says “Assuming a 38% mmWave mix, the blended materials cost for the iPhone 12 with 128GB NAND flash is nearly $415, a 21% increase over its predecessor. Application processor, 5G baseband, display and 5G RF components represent the major areas of the cost increase,”.

Why Is iPhone 12 Expensive To Produce?

The high BOM of the new Apple iPhone 12 can attribute to a number of factors. 

One could be the new OLED panels that cost more that the LCD panel used on the iPhone 11, which alone adds a $23 cost increase to the new phone. 

In addition to that enabling 5G has also brought up the cost.

Apart from that, bringing back Qualcomm in the equation also added to the cost. 

Reportedly, the American chipset manufacturer has provided the paired transceivers and RF discrete components for both sub-6GHz and mmWave versions of the new iPhone 12 series.  

The report also says, “Our analysis shows the blended cost increase from the RF subsystem is around $19,”.

Additionally, the Apple A14 Bionic chipset is also the first 5nm chip from the company compared to the A13 from its predecessor, the new chipset has 11.8 billion transistors, 39% more. 

The new chipset adds another $17 in the BOM as the report suggests. 

The report also describes that “Apple’s self-designed components including the A14, PMIC, Audio and UWB chip make up over 16.7% of the overall BoM cost.“

Diversification Of Sources Of Supply Also Adding Up To The Cost

Reportedly, the new iPhone 12 gets its various components from a range of companies that also took a toll on the total BOM of the phone.

Apple sources its memory components from Samsung and KIOXIA (Toshiba), but the LPDDR4X RAM comes from SK Hynix and Micron as per the reports. 

The new camera component gets supplied by Sony, LG and Sharp while NXP and Broadcom supply the components required for wireless connections and touch controls.

For Cirrus Logic, Goertek, Knowles and AAC supply the audio design of the new iPhone. 

On the other hand, power and battery management ICs are supplied by TI and ST.

In addition to that, the new iPhone leverages the SiP (System in Package) by ASE and USI which is used to miniaturize the design and develop packaging for the smartphone.