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The A16 bionic chip costs up to $110 to produce, much more expensive than A15

On Oct. 8, Nikkei Asia and Japanese research firm Fomalhaut Techno Solutions found that the A16 bionic chip in Apple's iPhone 14 Pro costs $110 to produce, It is 2.4 times more expensive than the A15 used in the iPhone 13 series and iPhone 14.

Nikkei Asia and Fomalhaut took apart three models in the iPhone 14 series to examine components such as the processor and camera. They found that the iPhone 14 series cost about 20 percent more to produce than the iPhone 13 series.

Despite the lack of new features, the iPhone 14 still reflects Apple's strategy of focusing on ultra-high-performance devices, such as 4-nanometer chips and new camera components. 'Clearly, Apple has no choice but to stick to its strategy of introducing high-performance devices to differentiate itself, as it cannot compete on new features,' Fomalhaut analysts said.

Fomalhaut estimates that the iPhone 14 Pro Max will cost $501 to produce on a component basis, more than $60 more than the iPhone 13 Pro Max, which went on sale last year. Since its launch in 2018, component prices for high-end Max models have hovered between $400 and $450, resulting in a record total cost and increase for the iPhone Pro 14 Max.

The higher production costs are reportedly due to the A16 bionic chip in the iPhone 14 Pro model. The chip costs $110, more than 2.4 times more expensive than the A15 on the iPhone 13 Pro Max and iPhone 14. The A16 uses chip supplier Taiwan Semiconductor Manufacturing's 4-nanometer process, while the A15 uses a 5-nanometer process.

In addition, the new camera component (including SONY's CMOS image sensor) in the iPhone14 is 30% larger than the previous model, and the price is 50% higher, to $15.

The iPhone 14's components, mainly from U.S. suppliers, accounted for 32.4 percent of its production cost, up 10 percent from the iPhone 13. However, South Korea was Apple's largest collar supplier in 2021, with its share of production falling 5 percentage points to 24.8 percent.

Apple has outsourced much of its iPhone production to Chinese manufacturers, though it is now diversifying into other regions such as India and Southeast Asia. Apple's review of its supply chain for electronics and other components could change future purchasing strategies.

Nikkei Asia and Fomalhaut also claimed that while Apple has raised iPhone prices in countries such as Japan and Australia, it has not done so in the U.S. and other markets, and that higher production costs have led to lower profits.

However, the change in iPhone pricing could also be influenced by currency. The dollar's consistently strong performance in 2022 compared to other currencies means it's cheaper for Americans to buy imported goods.