Although some analysts and supply chain sources have suggested that this year’s iPhone lineup will launch with the same pricing tier as the current iPhone 12 models, new information suggests that Apple may be forced to raise its iPhone prices after all.
This could also explain why we haven’t heard much about Apple’s proposed “iPhone 13” pricing. Last year, pricing details were leaking out several months in advance of the iPhone 12 release, but things have been much quieter this time around, which could suggest that Apple has taken longer to make up its mind on how it should price this year’s models.
To be fair, there’s been every reason to believe that Apple wants to keep its “iPhone 13” prices the same. Historically, most years Apple has sold its newest iPhone models for the same prices as their predecessors, sometimes even bumping up the storage capacity at those same price points.
In fact, excluding the successor to the original 2007 iPhone, which was arguably a special case since it wasn’t sold through carriers, Apple has only permanently raised its base iPhone prices twice — the 2011 iPhone 4S jumped by $50 to $649, and six years later the iPhone 8 made a similar jump up to $699. While the iPhone XR sold for a higher $749 in 2018, this wasn’t a permanent increase, as the iPhone 11 returned to the former $699 price point.
While prices naturally increased for the iPhone “Plus” models and of course the iPhone X, it’s fair to say that these were entirely new tiers, and they also remained consistent throughout Apple’s history, with the “Plus” models selling for $100 more than their corresponding standard versions.
Similarly, the iPhone X ushered in what would become Apple’s new flagship “Pro” lineup, with the subsequent iPhone XS, iPhone 11 Pro, and iPhone 12 Pro coming in at the same $999 price, with the later “Max” models selling for $100 more, just like the “Plus” models before.
Rising Production Costs
Unfortunately, as much as Apple may prefer to avoid raising its iPhone prices, this may not entirely be within its control.
According to a new report from DigiTimes, industry sources have revealed that Apple’s main chip fabrication partner, Taiwan Semiconductor Manufacturing Company (TSMC), is about to raise its prices for “advanced sub-7nm process technologies,” which will drive up Apple’s iPhone manufacturing costs.
The price increase would almost certainly affect Apple’s new A15 chip, which is expected to be at the core of the entire iPhone 13 lineup (and possibly even the rumoured “iPad mini 6”), since it’s based on 5nm technologies.
It also doesn’t likely help that TSMC is prioritizing Apple’s chips in the midst of an ongoing global chip shortage. While some of this is undoubtedly a result of Apple’s massive scale, TSMC is unlikely to eat the higher production costs when producing hundreds of millions of A15 chips for Apple.
According to supply chain sources, Apple accounts for over 20 percent of TSMC’s processor business, which means it could be getting a bit of a break, however. While TSMC has apparently notified customers of increases of up to 20%, with sub-7nm processors rising between 3% and 10%, sources say that the prices for Apple are only rising by up to 5%.
While these increases aren’t expected to kick in until January 2022, if Apple does decide to raise the selling prices of its new “iPhone 13” models, it will do so right out of the gate, since that’s better than increasing them in the middle of the product cycle.
While DigiTimes has a fairly good read on Apple’s supply chain, it’s less accurate when it comes to predicting what Apple will actually do, however. While “market sources” have told DigiTimes that “Apple is likely to set higher prices for its upcoming iPhone and other series,” that’s by no means a sure thing.
After all, if Apple is truly facing only a 3–5% increase in the costs to manufacture its A15, the company could decide it’s better to eat those costs and keep its selling prices at the same $699/$799/$999/$1,099 levels. As powerful as the A15 chip is, there are a lot of other expensive components that make up the iPhone.
On the other hand, it’s possible Apple’s costs for some of those may be increasing as well, particularly when you consider that this year’s Pro models are expected to gain improved 120Hz LTPO displays that will likely feature Always-On technology.
It’s also fair to say that the iPhone lineup may be due for a price increase by now. While obviously nobody likes to see that, Apple has done an admirable job of keeping things pretty steady for the past four years. This is especially true among the higher-end models, which surely have much higher incremental production costs, yet have sold at the same prices since the iPhone X was released in 2017.