The New Reality: Storage, Not Screens, Now Drives iPhone Prices
The main topic is the rapid rise of iPhone production costs driven by expensive NAND storage and DRAM memory, which now dominate the bill of materials, pushing Apple to cut production of base models and consider iPhone price increases that will directly affect what consumers pay and the value they receive. Apple’s premium phones are no longer defined financially by their cameras or displays, but by the invisible memory chips buried inside. For the upcoming iPhone 18 Pro Max, NAND storage alone is now the single biggest cost component, exceeding USD 250 (approx. RM1,150) per unit and representing a larger share of the device’s cost than any other part. When the storage and DRAM together make up nearly half of total manufacturing expenses, the old assumption that more capacity is a minor upsell collapses. Higher capacity iPhones have become materially more expensive to build, and Apple is passing at least part of that burden on to buyers.
How NAND, DRAM and Chips Blew Up iPhone Production Costs
Behind the headline iPhone price increase is a brutal shift in the cost structure of the device. Counterpoint’s estimates show the bill of materials for the iPhone 18 Pro Max rising by about USD 300 (approx. RM1,380) for the 1TB model compared with the previous generation, driven by NAND storage prices, DRAM and more advanced chip manufacturing expenses. On the 1TB iPhone 18 Pro Max, NAND alone now accounts for over USD 250 (approx. RM1,150), and combined NAND and DRAM costs are around USD 400 (approx. RM1,840), nearly half of the total device cost. In contrast, memory and flash storage were only about 9 percent of the BOM for a 256GB iPhone 17 Pro; they are expected to jump to 27 percent for the 256GB iPhone 18 Pro. Add in an expected 2nm processor and advanced packaging, and the core silicon in each flagship iPhone has turned into a financial black hole sucking in Apple’s margins.
Apple’s Margin Squeeze and the Logic Behind Production Cuts
Apple’s typical playbook is clear: absorb some cost increases, raise retail prices where the market will tolerate them, and squeeze suppliers for savings elsewhere. This time, the numbers limit its room to maneuver. The BOM for the iPhone 18 Pro Max is projected to increase by USD 300 (approx. RM1,380), but the expected retail price hike is closer to USD 200 (approx. RM920), implying a deliberate hit to margins on top-end models. That helps explain why Apple has reportedly escalated production cuts on the base iPhone 17, first trimming lines by 15 percent and then ramping the reduction to 33 percent amid rising hardware costs. When the entry model starts at USD 799 (approx. RM3,680) and already carries thinner margins than the Pro line, slashing output becomes a blunt tool to keep profit per unit from eroding further. This is not a subtle adjustment; it is Apple conceding that its cost structure is outpacing what mainstream buyers will currently pay.
What This Means for Buyers: Rethinking Storage and Upgrade Cycles
For ordinary users, the story is not abstract. Production cost increases of up to USD 300 (approx. RM1,380) per high-end device, paired with retail price hikes of around USD 200 (approx. RM920), mean you will likely pay more for similar or only slightly better specs, while Apple earns less per phone. The gap between base and high-capacity models will feel steeper, because the 2TB iPhone 18 Pro Max is tipped to be the most expensive in the lineup to manufacture, on top of the existing USD 1,999 (approx. RM9,200) price for a 2TB 17 Pro Max. Apple is expected to apply different price increases across storage variants rather than a flat uplift, rewarding those who can live with smaller storage and punishing heavy users of video, offline media and large apps. In a world where NAND storage prices and DRAM costs dominate iPhone production costs, your choice of storage tier has become the single biggest lever for controlling how much you spend.
The Next iPhone Generation: More Expensive Chips, Fewer Component Upgrades
The trajectory from here is uncomfortable but clear: component shortages and surging memory contract prices since late last year are still pushing NAND and DRAM higher, with a 12GB LPDDR5X module tripling in price since early 2025 and approaching USD 145 (approx. RM670). A 256GB NAND module is on course to hit USD 51 (approx. RM235), feeding straight into the rising BOM of future models. For the iPhone 18 Pro duo, this cost climate is already limiting Apple’s ambitions. Reports suggest the odds of LPDDR6 RAM are reduced, because adding bleeding-edge memory on top of an expensive 2nm chipset and advanced packaging would push iPhone production costs even further out of balance. Display costs may fall and camera costs only inch up, but that won’t offset the memory and chip manufacturing expenses enough to reverse the margin squeeze. Buyers should expect more careful spec bumps and sharper price tiering, not a return to generous hardware upgrades at familiar prices.
