iPhone 18 Pro BOM costs jump 38% on memory chip prices

Memory now consumes roughly a third of the iPhone 18 Pro's bill of materials, up from a tenth a year ago.

Soaring memory chip prices will lift the iPhone 18 Pro's bill of materials by about 38 percent year over year, forcing Apple to weigh margin cuts against price hikes as component costs climb.

Memory's share of the 256GB Pro model's BOM has climbed from roughly 10 percent a year ago to about 34 percent in the third quarter, and is expected to exceed 40 percent in the first half of 2027, according to TrendForce's smartphone research.

The 256GB iPhone 18 Pro, due in the third quarter of 2026, will cost about 38 percent more to build than its 2025 predecessor, TrendForce estimates. Memory prices have risen five- to sevenfold since the start of 2025, upending a cost structure where the application processor and display once dominated.

Apple, trading at 35.9 times earnings with a market value of about $4.57 trillion, may absorb part of the increase by trimming gross margins, following the strategy it used for recent MacBook launches. Android vendors face a sharper squeeze, with budget and mid-range models already slipping into negative margins.

Memory Replaces the Processor as the Cost Driver

For years, the application processor and display decided how expensive an iPhone was to build. Memory has now taken over that role, a reordering TrendForce expects to persist as chip prices keep climbing into 2027. The shift reflects an AI-driven surge in demand for DRAM and NAND, with suppliers Samsung, SK Hynix, and Micron raising prices as data-center buildouts absorb supply.

Apple is likely to follow the pricing strategy adopted for its recent MacBook launches, sacrificing part of its gross margin to soften price increases for the iPhone 18 lineup and preserve shipment volume. The company may also raise prices on older iPhone models alongside the new generation to offset rising memory costs. If memory prices keep climbing, TrendForce projects the BOM cost of the iPhone 18 Pro 256GB will rise further in 2027.

Android Vendors Face a Steeper Squeeze

If Apple, with its industry-leading profitability, is under pressure, Android smartphone makers face an even greater margin squeeze. Memory prices have risen five- to sevenfold since early 2025, and entry-level and mid-range phones lack the pricing cushion of flagships. TrendForce expects several brands to raise prices sharply or discontinue product lines that have slipped into negative gross margins, with global smartphone production under downward pressure from the second half of 2026 through 2027.

So What for Investors

The memory crunch benefits suppliers — Samsung, SK Hynix, and Micron — while squeezing device makers. Apple's decision to test China's CXMT memory chips for iPhones and MacBooks signals it is seeking alternative supply as prices climb, though any deal would require White House approval given the sensitivity around Chinese semiconductor suppliers. Apple shares, trading at 35.9 times earnings versus a five-year median of 30.6 times, have priced in strong profitability, but rising component costs could pressure margins if the company holds prices to protect demand.

This article is for informational purposes only and does not constitute investment advice.