he new Apple iPhone 8 Plus, equipped with 64GB of NAND flash memory, carries a bill of materials (BOM) cost that comes out to $288.08, higher than any previous versions of the company’s smartphones, according to a preliminary estimate from IHS Markit.
After $7.36 in basic manufacturing costs are added, Apple‘s total cost to make the iPhone 8 Plus rises to $295.44, $17.78 higher than that of the iPhone 7 Plus. IHS Markit also estimates that the iPhone 8 bill of materials is $247.51, or $9.57 higher than the Phone 7 at the time of release. The unsubsidized price for a 64GB iPhone 8 starts at $699, which is $50 more than the starting price for the iPhone 7 at launch. The iPhone 8 Plus starts at $799, which is $30 higher than that of the iPhone 7 Plus at launch.
IHS Markit is in the process of performing an analysis of the iPhone 8, which will explain how the price differential on the iPhone 7 and 7 Plus was $120 last year, while the iPhone 8 price differential returned to $100.
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, said Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit. From a teardown perspective, the biggest cost adders would be the increased NAND flash memory content and new wireless charging components.
Like the iPhone 7 Plus, the iPhone 8 Plus features a 5.5-inch Full HD display, an aluminum frame and hardened glass. This year’s model features wireless charging, hence the aluminum uni-body design was abandoned for a more traditional glass back. The iPhone 8 and 8 Plus are available in Silver, Space Gray and Rose Gold.
The introduction of the iPhone 8 and 8 Plus comes at a time when the major smartphone makers are in a fierce battle for market share. According to the IHS Markit Smartphone Model Market Tracker for Q3 2017, the top three smartphone makers are Samsung, with 23 percent of the market; Apple, with 12 percent; and Huawei with 11 percent.
The new iPhone 8 and 8 Plus, and later the iPhone X, are important devices for Apple and anticipation is running high. Apple’s shipments for the last quarter were flat year-on-year and Samsung’s Galaxy S8 devices have been successful in the high-end pricing segment, creating a competitive environment, said Gerrit Schneemann, senior analyst for mobile handsets. The iPhone X stands to further confirm Apple’s grip on the premium pricing tier when it becomes available in November.