Apple Absorbs iPhone Memory Inflation with Pricing Power
Apple is facing nearly 400% inflation in iPhone memory costs, according to estimates from TrendForce. The cost of memory for the 256GB iPhone 18 Pro is expected to rise by 369%, while the total bill of materials (BOM) will increase by about 38%. However, Apple can still absorb part of this increase through pricing power.
TrendForce projects that prices for new fall models will rise roughly 10-20%, with Apple aiming to preserve market share. The company's current launch outlook includes the iPhone 18 Pro, Pro Max, and a tentative iPhone 18 Fold this fall, while the standard iPhone 18 and other variants are expected in the first quarter of 2027.
Apple's pricing power has been demonstrated by its recent sales performance, with Counterpoint estimates showing that Apple's Q2 smartphone revenue rose 22% year over year, supported by 13% shipment growth and an 8% increase in average selling price. However, the company cannot remove demand elasticity, and a higher average selling price protects profitability only while additional revenue per device exceeds gross profit lost through weaker upgrades and lower unit volumes.