How Much It Costs Apple to Make an iPhone 14 Pro Max 

Narrator: Have you ever wondered how much one of these actually cost Apple to make? Unfortunately, the company doesn’t release official profit margins for its devices. That’s why I reached out to Counterpoint Research for material cost breakdown. Some parts of the new phone are cheaper. But Apple kept the price we pay the same. Why is that? Let’s look at what the researchers found.

Tim Cook: The best iPhones we’ve ever created.

Narrator: The iPhone 14 Pro Max is the newest, priciest and most feature-rich phone you can get from Apple. It has the biggest display, a more advanced camera, so how much does all that contribute to its cost? Let’s take a look at this chart. As you can see, the most expensive parts were the always on display and the processing components. Together, they make up about 40% of Apple’s costs. The cellular parts cost about 13%. The cameras including the new 48-megapixel main camera only account for 11%. Other small parts like the buttons, speakers and internal controllers make up the remaining costs. Overall, Counterpoint says Apple pays about $464 for the parts of this phone. That’s a tad bit more than what Apple paid for the iPhone 13 Pro Max.

Despite the $17 rise in material costs, Apple kept the retail price the same. Generally, what it costs to make an iPhone trends upward over time. There are two big reasons for this. Number one is innovation. Premium phones keep getting better and they have to get your attention. Analysts suspect Apple will continue raising prices to offset innovation.

Angelo Zino: As you continue to see more of that innovation and giving the consumers more of what they want on that side of things, pricing will continue to go higher.

Narrator: The original iPhone reportedly cost Apple about $218 to make. One of the biggest jumps came a couple years back between the basic iPhone 11 and the basic iPhone 12. Adding 5G to the iPhone, switching from LCD to OLED screens and other changes raised the cost 26%. The 5G components alone tacked on $34. But now 5G is the industry standard and the reverse is starting to happen. The parts that enable cellular service are cheaper than the previous generation.

Number two, inflation. Adjusted for that, a $649 iPhone 6 from 2014 would be about $896 today. But over time, you do start to get more for your money.

Angelo Zino: A big strategy of Apple is actually to use lower component prices to pack more great content, so essentially pushing more of the cost benefits to the consumer through more content.

Narrator: These percentages are just calculated estimates because Apple’s deals with suppliers are top secret. While the iPhone maker releases an annual list of its suppliers, it doesn’t say how much business it does with each company. Nor does it describe what the suppliers do. One way Apple is dealing with those rising costs is by designing more parts in-house. Analysts say adding more homegrown parts to devices should help bring costs down over time.

Angelo Zino: If Apple wasn’t getting a cost benefit internally, designing their own chips, they probably wouldn’t be doing it.

Narrator: Apple declined to comment on this report But the company does control the vast majority of smartphone industry profits. And pushing premium pro-level devices helps it retain that lead.

Angelo Zino: Bigger benefit for Apple than other hardware makers out there, like PC vendors, is Apple’s brand allows it to really sustain its elevated prices.

Narrator: This strategy is important to Apple’s biggest smartphone competitor, too. Samsung’s high-end phones are also sold for more than twice the cost of materials. The report doesn’t tell us how much Apple spends on other critical parts of its planning and distribution. We still don’t know how much Apple spends on sales and marketing, shipping, or even retail, but the report does offer a decent glimpse at what you’re actually paying for.