The iPhone 14 Pro Max brings Apple’s worst profit margin

By Scott Marlette Last updated Oct 7, 2022

Apple didn’t raise the price of its iPhone 14 series models, but don’t feel bad for its bottom line as the line actually comes with a higher average selling price than the iPhone 13 series, thanks to the iPhone 14 Plus replacing the deprecated mini model.

Apple managed to reach a $3796 average selling price by killing the mini form factor, but and replacing it with a big but “affordable” $899 iPhone 14 Plus at its place. Moreover, it made such a large specs gap between the Pro versions and the regular iPhone 14 that its heretofore bestseller is languishing in sales for the sake of orders being heavily skewed to the Pro versions, of which the iPhone 14 Pro Max, in particular, commands the whopping 60% share.

How much does the iPhone 14 Pro Max cost to make?

If you thought, however, that Apple is making a killing on the iPhone 14 Pro Max the way it does on the basic non-Pro models, a Fomalhaut teardown for Nikkei informs us that this is not the case.

According to the team at Nikkei Asia that does device disassembly partnerships to determine their Bill of Materials (BOM) costs, or the total price of components and assembly involved to make it, apart from the R&D expenses and marketing and distribution efforts, the iPhone 14 Pro Max parts cost 20% more than the iPhone 13 Pro Max ones at launch.

The 14 Pro Max has Apple’s worst component-to-retail price ratio so far”&nbsp

This is rather unsurprising, given the brand new 4nm Apple A16 processor inside that is estimated to come at the whopping $110 apiece There are also new cameras that cost 50% more than the previous sensors, as well as a Samsung panel with the latest 12th-gen OLED technology that allows Apple to boast the “brightest phone screen” in marketing materials.

Add more RAM, satellite connectivity, and tucking the Face ID modules in display cutouts, and the iPhone 14 Pro Max components now cost $501 – an all-time high for an Apple handset – considering that the Max models have hovered in the $400-$450 cost range to make since the line’s inception.

According to Minatake Kashio of Fomalhaut Techno Solutions which did the teardown and BoM estimation, Apple “has no other choice but resort to a strategy of mounting high-performance devices to differentiate itself as it cannot compete on new functions.”

Android phone makers are already at things like 10x periscope zoom which are rather costly as components go, so Apple had to bump something in the camera department if it wanted to stay in the specs game. Android flagships have also had superbright HDR displays with granular dynamic refresh rate for a while now, so Apple reluctantly bumped the specs sheet of the iPhone 14 Pro Max in that direction as well.

While it didn’t raise the price of the Pro models in the US, even though they cost a lot more to make than its usual BoM, Apple did raise them globally. That was mostly to account for the strong dollar and compensate for the new exchange rate, though, while in the US, according to the teardown analysts, it is simply eating the difference in profit margins.

Apple now uses a lot more ‘made in the US’ components

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