The 512GB iPhone XS and iPhone XS Max Are Major Profit Makers for Apple

The 512GB variant of the iPhone XS and iPhone XS Max are a major profit earner for Apple since the company does not have to make any design changes to account for the higher storage NAND chip. As per Bloomberg report citing analysts, Apple is charging customers significantly more for the 512GB iPhone XS and iPhone XS Max than what it pays its suppliers for the chip.

As per Wayne Lam of IHS Markit, Apple pays its suppliers 25 cents per gigabyte, while it charges its customers around 78 cents per gigabyte. In comparison, Samsung charges its customers 68 cents to go from the 128GB to 512GB variant of the Galaxy Note 9.

The higher the storage variant that Apple sells, the more profit it makes off them. To upgrade from the 64GB iPhone XS to 512GB iPhone XS, Apple charges a staggering $350 while it pays its suppliers only around $132.5 for the chip. The report states that Apple could make about $134 per unit more than what it makes on the smallest storage option.

 The market price of this component is about half what it was a year ago, according to InSpectrum Tech data. But Apple isn’t passing the savings on to consumers: The 78¢-per-gig charge hasn’t budged since last year. Of course, Apple uses contracts to lock in the price of such components as Nand flash, so it may not be benefiting yet from recent price declines.

With the iPhone X last year, Apple offered a maximum of 256GB storage space. This year, it has added 512GB as a storage option as well and despite the steep price, many consumers are opting for it which in turn is only going to help Apple’s bottom line. Apple continues to charge its customers a staggering sum of money for a jump in NAND storage size despite NAND storage prices dropping by almost 50 percent over the last one year. By not passing these savings to customers, Apple is pocketing the extra money, and it will continue to do so as long as people are willing to buy its 512GB iPhone XS Max for almost $1,500.

The Bloomberg report calls the 512GB storage option of the iPhone XS the ‘most lucrative new iPhone feature’ and rightfully so. It is not a pathbreaking feature and it is not a feature that will greatly benefit everyone. But it is a feature that will help Apple make a staggering amount of profit.

Did you purchase a 512GB iPhone XS or iPhone XS Max from Apple? If so, why?

[Via Bloomberg]

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