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Apple iPhone 12 costs a lot more than the iPhone 11 to produce, reveals report

While Apple saved up by removing two key accessories from the box, the brand also ended up spending more on making the new iPhone 12.

Apple's iPhone 12 was launched at a starting price of Rs 79,900 (Image credit: Anuj Bhatia/Indian Express)

The iPhone 12 has reportedly cost Apple 21 per cent more to produce compared to the iPhone 11. As per a recent report by Counterpoint Research, the new iPhone 12’s Bill of Materials (BOM) total comes to $431. This is due to Apple’s newer parts that went into the phone, including the 5G-components and the new A14 Bionic chipset.

“Assuming a 38% mmWave mix, the blended materials cost for the iPhone 12 with 128GB NAND flash is nearly $415, a 21% increase over its predecessor. Application processor, 5G baseband, display and 5G RF components represent the major areas of the cost increase,” said the report.

Why is the new iPhone so expensive to produce?

The new Apple iPhone 12 can attribute its high BOM to a number of factors. One of them is the new OLED panels that cost more that the LCD panel used on the iPhone 11. This alone adds a $23 cost increase to the new phone. Enabling 5G has also brought up the cost, also bringing back Qualcomm in the equation. The American chipset manufacturer has provided the paired transceivers and RF discrete components for both sub-6GHz and mmWave versions of the new iPhone 12 series. “Our analysis shows the blended cost increase from the RF subsystem is around $19,” says the Report.

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The Apple A14 Bionic chipset is also the first 5nm chip from the company. Compared to the A13 from its predecessor, the new chipset has 11.8 billion transistors, 39% more. The report suggests that the new chipset adds another $17 in the BOM. It also mentions that “our analysis also suggests Apple’s self-designed components including the A14, PMIC, Audio and UWB chip make up over 16.7% of the overall BoM cost.“

The iPhone 12 features the A14 Bionic chip, the first 5nm chip by Apple. (Image Source: Apple)

Apple has diversified its sources of supply

The iPhone 12 gets its various components from a range of companies. This too takes a toll on the total BOM of the phone. The report mentions that Apple sources its memory components from Samsung and KIOXIA (Toshiba), but the LPDDR4X RAM comes from SK Hynix and Micron. While Sony, LG and Sharp supply the camera components of the new phone, NXP and Broadcom supply the components required for wireless connections and touch controls.

The report also adds that Cirrus Logic, Goertek, Knowles and AAC supply the audio design of the new iPhone. Meanwhile, the power and battery management ICs are supplied by TI and ST. The new iPhone also leverages the SiP (System in Package) by ASE and USI. This is used to miniaturise the design and develop packaging for the smartphone.

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