The cost of Apple's flagship smartphones is rapidly climbing. My analysis of market data shows that over the past 12 months, the price of a key component—memory for the iPhone 18 Pro—has soared nearly fourfold. This is an unprecedented jump that presents the company with a tough choice: sacrifice margin or pass costs on to consumers. Apparently, the final decision will be announced as early as next week alongside the unveiling of the new lineup.
According to my calculations, based on industry data, the 256GB storage for the Pro version now costs Apple roughly four times more than it did a year ago. Such a rise in costs cannot be ignored—it directly pressures profitability.
Apple's margin under threat: cost-cutting efforts are not enough
Clearly, Apple is trying to offset the higher memory costs by optimizing other components, but these measures are evidently insufficient. Reducing spending on hardware does not cover even a fraction of the price shock we are seeing in the semiconductor memory market. Management now faces a fundamental dilemma: either accept lower profits or raise retail prices.
Notably, Apple has already raised prices on Macs, iPads, and Apple TV this summer, citing a long period of holding costs down. For the iPhone, the company has so far held the line, but judging by the trend, this barrier will be breached.
Forecast: price increase of around $100
The most likely scenario I see is a price increase for the iPhone 18 Pro of roughly $100 compared to its predecessor. This is a more conservative estimate compared to some analyst projections, which have cited figures of $250–300. The company will not fully pass on the fourfold rise in memory costs to buyers—that would be too risky.
It is far more likely that Apple will bet on growing services revenue to soften the blow to its hardware business. Consumer caution should also be taken into account: a sharp price spike could discourage annual upgrades, and many users may prefer to extend the life of their current devices. This factor is especially important for investors amid the recent volatility in AAPL shares.
The Apple Upgrade installment program, which allows paying in installments, is designed to ease the strain on wallets. Exact figures and details will become known after the official announcement of the new lineup, which takes place next week.
My expert conclusion: The rise in memory prices is a systemic trend driven by the AI boom and a shortage of production capacity. I do not expect it to taper off in the coming quarters. For Apple, this means not just a one-time price increase, but the need to rethink its entire pricing strategy in the long term, which could reshape demand in the premium smartphone market.