Apple's iPhone 18 Pro price hike expected to be much less than many feared
J.P. Morgan analysts tell clients not to expect a huge increase in iPhone 18 Pro pricing.
Price hike for iPhone 18 Pro series might not be so bad | Image by FPT.
Apple CEO (until September 1) Tim Cook made it clear earlier this month that Apple is going to have to hike prices, calling a price increase "unavoidable." Immediately everyone started to worry about how much they might have to pay for a new iPhone 18 Pro or iPhone 18 Pro Max, both of which are expected to be unveiled in less than three months from today.
Price hikes due to shortages of memory and storage chips put pressure on Apple's iPhone pricing
According to research firm TechInsights, to maintain its current profit margins on the iPhone 18 Pro, Apple will have to hike the price of that model by $270. The Wall Street Journal did some computations of its own and estimates that the $1,099 starting price for the iPhone 17 Pro could turn into $1,399 or more for the iPhone 18 Pro. The Journal, like TechInsights, looked at Apple's typical profit margins and added price hikes for storage, memory (RAM), and camera components.
Which iPhone to be introduced in September will you buy?
What is causing the unavoidable price hikes is the heavy demand for memory and storage chips driven by the boom in AI data center construction. As a result, companies that manufacture memory chips such as Samsung, Micron, and SK Hynix are making changes to their production lines to favor the manufacturing of High-Bandwidth Memory (HBM) and advanced server DRAM. Obviously, these companies prefer to build AI components with higher margins than standard memory components.
J.P. Morgan says iPhone price hike could amount to no more than $50
With the aforementioned companies allotting more of their wafers and cleanroom space to the production of highly profitable AI components, this results in shortages of the memory chips used for smartphones and other consumer electronic products. And Econ 101 taught us that even if demand holds steady, a decrease in supply will force prices higher.
Max Weinbach reveals J.P. Morgan's take on iPhone price increases. | Image by X
Still young, analyst Max Weinbach posted a tweet on Tuesday citing a research report from global financial services firm J.P. Morgan that calls for much lower price increases than expected for the iPhone 17, iPhone 18, and iPhone 20 (Apple is reportedly skipping the iPhone 19 series to celebrate the device's 20th anniversary in 2027). J.P. Morgan analysts believe that Apple will raise prices by no more than $50 on those models and will try other ways to save money, including the use of Apple's own C-series modem.
Tim Cook's brilliant pricing strategy
If J.P. Morgan is right, Tim Cook is leaving his CEO position at Apple with a brilliant strategy. By talking about instituting a price hike in the midst of a memory chip shortage, Cook has everyone expecting a $300 price increase for the iPhone 18 Pro, matching the estimate from the WSJ. This way, when Apple raises prices by only $50, it will feel as though it kept prices steady.
In the US, the last increase implemented by Apple on iPhone prices took place in September 2023. That $100 increase in the price of the base iPhone 15 Pro Max took the starting price of the phone to $1,199 from $1,099. But this really wasn't a price increase as Apple merely raised the starting amount of storage on the model from 128GB to 256GB and eliminated the lower-priced $1,099 option.
On the other hand, Apple has kept the starting price for its entry-level phone at $799 since the release of the iPhone 12 in 2020. That's despite some nice upgrades added by Apple to the base iPhone 17, such as a larger 6.3-inch display, the use of the 120Hz ProMotion screen, and the Always-On display feature. The 6.3-inch screen, 120Hz refresh rate, and the Always-On display had previously been reserved for Pro models only.
Apple will unveil its premium iPhone models in less than three months
Apple is expected to introduce and release the iPhone 18 Pro and iPhone 18 Pro Max this September. The foldable iPhone Ultra should also be unveiled in September, although it might not be released until later in the year. The iPhone 18, the lower-priced iPhone 18e, and the iPhone Air 2 are penciled in for a spring 2027 launch.
On September 1, Cook will no longer be CEO of Apple after a little more than 15 years as the tech giant's top executive. Cook will become the Executive Chairman of Apple's board of directors, while John Ternus steps up to become the seventh CEO in company history.
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