Highlights
- The estimated BOM for the iPhone 16 Pro Max is $485.
- It is slightly higher than the iPhone 15 Pro Max’s $453.
- BOM excludes other significant expenses such as research, development, marketing, and distribution.
- Apple’s gross margin on the iPhone 16 Pro Max is around 60%.
The first cost estimate for manufacturing the iPhone 16 Pro Max has surfaced online after the teardown video.
In industry terms, it is also known as the Bill of Materials (BOM). Before we explore the iPhone Pro Max cost sheet released by research firm TD Cowen, it is important to note a few details.
First of all, this estimated cost of manufacturing only reflects the direct costs of production. It does not include various other significant expenses such as research, development, marketing, and distribution.
Tim Cook has famously said that BOM estimates don’t accurately capture the actual expenses as the real cost of production is much higher.
However, BOM analyses provide an interesting insight. It also gives an idea of how hardware upgrades contribute to price changes.
According to research firm TD Cowen, the iPhone 16 Pro Max’s production cost is estimated at $485. This is only slightly higher when compared to the iPhone 15 Pro Max’s BOM of $453.
It is interesting to note that even with a larger 6.9-inch display, a bigger battery, a new Camera Control button and the faster Apple A18 Pro processor in iPhone 16 Pro Max, the overall production cost hasn’t risen too much.
The TD Cowen report reveals that the most expensive components are the larger display and the Tetraprism camera system. These also have seen a small price increase.
Moreover, the new LPDDR5X memory technology, storage, and chipset are also expensive when compared to the cost of these same components in the iPhone 15 Pro Max.
The new pressure-sensitive Camera Control button is not a major cost factor. It adds only $19 to the total BOM.
This also means that Apple’s gross margin on the iPhone 16 Pro Max, which is also its latest flagship device, remains substantial. We can conclude that Apple earns a 60% gross margin on its flagship.
FAQs
Q1. What is the estimated cost of manufacturing the iPhone 16 Pro Max?
Answer. The estimated Bill of Materials (BOM) for the iPhone 16 Pro Max is $485, according to research firm TD Cowen.
Q2. Which components contribute most to the increased cost of the iPhone 16 Pro Max?
Answer. The most expensive components are the larger display, Tetraprism camera system, and new LPDDR5X memory technology.
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