Apple’s iPhone 8 Plus is one of the company’s most expensive smartphones to make to date, but price hikes are likely to help maintain a healthy margin, according to analysis.
The bill of materials (BOM) cost for the 5.5-inch iPhone 8 Plus with 64 gigabyte memory came in at $288.08, IHS Markit revealed in a teardown of the device. This was higher than the $277.66 cost of the iPhone 7 Plus. But the price for the iPhone 8 Plus is $799, which is $30 higher than its predecessor.
Meanwhile, the bill of materials cost for the iPhone 8 is $247.51, which is nearly $10 more than the iPhone 7. The iPhone 8 has a starting retail price of $699, which is $50 more than the iPhone 7 however.
“The higher total BOM cost for the iPhone 8 Plus can’t be tied to a single area or feature. The higher cost is the result of slower annual component cost erosion tied in with additional features,” Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit, said in a press release Monday.
New features such as wireless charging and Apple’s own A11 Bionic chip added to the costs.
Apple has been successful in its history of maintaining very healthy margins while increasing the price of its flagships smartphones. Even though it is the second-largest smartphone maker by market share, it rakes in the most profit out of all of the manufacturers.
The Cupertino giant reported a gross profit margin of 38.5 percent in the June quarter. Analysts surveyed by Reuters expect that figure to be 37.9 percent in the September quarter.
“Our expectation is that Apple will absolutely maintain healthy margins. Apple likes to create the best products and a good return on them,” Ian Fogg, head of mobile at IHS Markit, told CNBC by phone Tuesday.
“What is remarkable about the iPhone is Apple has persuaded consumers to put more of their income towards their smartphone. At the same time, Apple has maintained historically excellent margins.”
IHS Markit has not yet done a teardown on the $999 iPhone X, but Fogg said that this will “definitely” be more expensive to produce than the iPhone 8 models. This is because of an OLED screen and more advanced sensors that allow users to unlock the device with their face.