The new iPhone 8 is a lot like the iPhone 7 both outside and in, but it's costing Apple a bit more to make.
Tech research firm TechInsights tore into the iPhone 8 Plus -- the A1897 model -- with 256 gigabytes of storage and estimated that the phone costs around $33 more to make than the previous generation iPhone. The firm estimated the iPhone 8's component costs come out to $367.50, up from $334.50 for the iPhone 7 Plus with 256GB.
The piece contributing most to this increase is more expensive memory chips. The cost for DDR4 memory chips went from $14.50 in the iPhone 7 to $21 in the latest phone. And NAND flash memory chips went from $55 to $75. In total, memory chips accounted for a $26.50 jump between the two generations of the iPhone. The demand is heavy for memory chips, but supply is limited. That's driving a global price increase for everyone.
Apple is using South Korean chipmaker SK Hynix as its flash memory supplier.
The second biggest price jump is coming from the iPhone 8's new processor, the A11 Bionic. The new chip is built on a 10-nanometer process node using Taiwan Semiconductor Manufacturing Company as the fabricator. The previous chip, the A10 Fusion, was built on a 14nm node. The higher transistor density is driving a $4.50 increase -- from $43.50 with the A10 to $48 with the A11, TechInsights estimated.
That means a bit slimmer margins for Apple with the iPhone 8, but Apple might be looking towards the iPhone X, due out later this year, for its big hardware margins.
“I think Apple is shooting for the iPhone X to get bigger margins,” said Al Cowsky, a costing manager at TechInsights, in an interview. “The iPhone 8 is almost a refresh of the iPhone 7. It’s not a huge game changer.”
Unsurprisingly, Intel continues to be an iPhone supplier. (The iPhone 7 was Intel's first win in the iPhone.) Inside the iPhone 8 is Intel's fourth-generation LTE modem -- the XMM 7480 -- TechInsights found. Intel advertised that this fourth-generation modem is theoretically capable of 600 megabits-per-second download speed and 150 Mbps upload speed. In comparison, iPhone 7's Intel modem had 450 Mbps download speed and 100 Mbps speed. Intel also supplied the transceiver and power management chip in the iPhone 8.
Qualcomm is likely second source for the iPhone 8's baseband modem in order for Apple to continue to support a type of cellular technology, called "code-division multiple access," that runs on Verizon and Sprint networks. Qualcomm and Apple are currently embroiled in a legal fight over how Qualcomm licenses its phone technology.
