Apple: Will the iPhone Be 30% Costlier in 2020?

If there is something that generates tremendous buzz in the gadget world, it’s the iPhone. While Apple is trying to move from dependence on its smartphone business, it still has a lot in store for iPhone loyalists. According to previous reports, 2020 could see the launch of the long-awaited 5G (fifth-generation) iPhone. With reported 5G capability, the upcoming iPhone 12 will likely be a game-changer for Apple.

The launch of the iPhone 11 series in September led to a bit of a rebound in demand. However, we can only see the concrete results in the December quarter. The primary reasons for the iPhone 11’s success are its affordable cost and advanced features. However, its successor—the iPhone 12—may have a different story to tell. It may not be price-friendly owing to its cutting-edge 5G specs. Let’s take a detailed look at why the iPhone 12 could be a bit pricier.

Ming-Chi Kuo indicates 5G iPhones could be high-priced

On Sunday, Apple Insider reported analyst Ming-Chi Kuo’s note, which stated that the iPhone 12 could be quite expensive. Kuo revealed that the surface area of its main logic board could be nearly 10% larger, presumably to accommodate new technologies.

The device’s advanced components could lead to a 35% increase in input costs. The costly motherboard and OLED screen could lead to a higher price for the iPhone 12. Apple Insider further reported Kuo’s detailed explanation of how each of the components could increase the cost of construction. He said the metal frame could cost 50%–60% higher, while the cost of the tempered glass would increase by 40%–50%. Similarly, the grooved cover and chassis could increase the cost by 20%–30%.

This isn’t the first time that Kuo has hinted at high production costs for the iPhone 12. According to Wccftech’s October 9 article, Kuo’s investor note stated that the price of the 5G iPhone could rise. Kuo cited a new processing method and materials for the metal frame structure as reasons for the price hike. On the same note, Kuo stated that all the iPhone 12 models in 2020 would sport 5G connectivity.

Kuo further predicted that the iPhone 12 would feature VCSEL rangefinders and a TrueDepth camera notch. These advanced elements would enhance photo quality and offer an augmented reality experience. According to Kuo, the high-end specs of the iPhone 12 would significantly benefit Apple’s direct suppliers. Among its motherboard suppliers, EMC, AT&S, and Avary could see improved revenue and profitability due to the iPhone 12.

Price of other 5G smartphones

Kuo’s forecast indicates that the cost of chipset for the 5G iPhone would be 35% higher. However, it isn’t confirmed whether the retail price would also be impacted at the same rate. We expect that Apple would pass on the cost increase to the customers. Tech Radar’s Tom Bedford estimates that if the iPhone 11 costs $699, the next iPhone could cost $1,200.

Wccftech’s Omar Sohail has a similar opinion. In his October 9 article, he stated that the iPhone 12’s price could cross $1,200. According to Samsung, the Galaxy S10 5G smartphone costs nearly $1,299. A recent review by Tom’s Guide indicates that among the field of 5G smartphones, OnePlus 7T Pro, LG V50 ThinQ, and MotoZ4 are priced below $1,000.

Consumer response to Apple’s 5G iPhone crucial

Last week, we discussed how 5G would give a much-needed boost to flagging iPhone sales. However, after tasting success with the cheaper iPhone 11, is Apple making the right move by introducing the pricier iPhone 12? Even with more affordable options available, will buyers pay more for 5G iPhones? We’ll keep an eye on this development as more information becomes available.

On October 22, Kuo indicated that in 2020, Apple would also launch the iPhone SE2. Without the 5G network, the SE2 could be more affordable than the iPhone 11.

On October 30, Bloomberg reported GF securities analyst Jeff Pu’s comments on 5G shipments. He noted, “The new entry-level iPhone SE2 will help iPhone shipments see double-digit year-to-year growth in the first half.” He added, “The combination of a lower-cost 4G phone and premium 5G handsets in the second half will help Apple appeal to both cost-sensitive users and high-spending customers.”

Introducing another 5G iPhone is not without risk for Apple. However, it seems that the company aims to balance the best of both worlds and offer iPhones to meet the needs of a wide range of users. Next year, we’ll see how buyers respond to the two iPhone releases at opposite ends of the price spectrum.