Apple is set to increase iPhone prices due to unsustainable costs for RAM and chipsets, according to CEO Tim Cook. The company had previously managed to offset rising component costs by increasing base storage, but that strategy is no longer viable.
Rising Smartphone Costs Across the Industry
Smartphone manufacturers have raised prices by 14-15% on average due to surging chipset costs. In recent weeks, additional price hikes of Rs 5,000 to Rs 12,000 have been applied to existing models. The cost pressures are driven by semiconductor firms prioritizing shipments to generative AI companies, reducing availability for consumer devices and driving up costs.
Apple's Cost Mitigation Strategies End
Apple previously mitigated rising costs by offering higher base storage at the same price point. However, Tim Cook stated that the situation has become unsustainable, necessitating price increases for iPhones. No significant discounts are expected during seasonal sales or e-commerce promotions.
Industry-Wide Cost-Cutting Measures
To manage rising component costs, other smartphone makers are adopting measures such as using outdated chipsets, reducing camera sensors, and making cosmetic changes rather than major upgrades. These strategies aim to keep prices competitive while maintaining margins.
The price hikes come amid a broader trend of increasing smartphone costs globally, driven by supply chain constraints and high demand for semiconductors from AI and other advanced technologies.
