How Much Does It Really Cost to Make an iPhone 16 Pro? A Closer Look at the Manufacturing Costs

In today’s smartphone market, flagship devices come with hefty price tags, and it’s no surprise that consumers are increasingly curious about how much these high-end devices actually cost to manufacture. With the release of the iPhone 16 Pro, many are asking: what is the true cost of building one of Apple’s latest premium smartphones?

According to a teardown analysis by Nikkei, the iPhone 16 Pro has a Bill of Materials (BOM) totaling US$568 (approximately RM2,511), which represents a significant increase of around 6% compared to last year’s iPhone 15 Pro. To put this in perspective, a BOM refers to the cost of all the physical components and materials used to create a device, such as its display, chips, cameras, and other essential parts. However, it’s important to note that this figure excludes other costs like assembly, marketing, shipping, and retail expenses.

The iPhone 16 Pro’s BOM highlights several key components that contribute to the overall production cost, with the most expensive being the Apple A18 Pro chip, which costs around US$135 (RM596) — accounting for roughly a quarter of the total BOM.

Key Components of the iPhone 16 Pro’s Bill of Materials

• Display: The Samsung-supplied M14 OLED display costs about US$110 (RM486), making it a key contributor to the overall BOM. Apple has continued to rely on Samsung for its OLED panels, which are known for their high-quality color accuracy and brightness.
• Camera: The camera modules, including both front and rear sensors, come in at US$91 (RM402). Apple continues to invest heavily in camera technology, making this one of the most critical aspects of the phone for consumers.
• Apple A18 Pro Chip: At US$135 (RM596), the A18 Pro chip is the brain of the iPhone 16 Pro. It’s designed to be more powerful and energy-efficient than its predecessor, offering better overall performance for demanding tasks like gaming and AI processing.

While the iPhone 16 Pro’s BOM is high, it’s still not the most expensive smartphone to build. In comparison, Google’s Pixel 9 Pro has a BOM of approximately US$406 (RM1,795), making it almost 30% cheaper to manufacture than the iPhone 16 Pro. The cost breakdown for the Pixel 9 Pro shows that it is equipped with Samsung’s M14 AMOLED display (costing US$75 or RM332) and Tensor G4 chipset (US$80 or RM354). Even though Google’s BOM has increased from the previous model, the Pixel 9 Pro still comes in at a lower cost compared to Apple’s flagship.

Comparison: iPhone 16 Pro vs Google Pixel 9 Pro BOM

As shown in the table, the iPhone 16 Pro’s display and chip are significantly more expensive than the Pixel 9 Pro’s, which helps explain the price difference between the two devices

Beyond the Bill of Materials: The True Cost of a Smartphone

While the BOM provides insight into how much it costs to make the physical device, it’s just one part of the equation. The final retail price of a smartphone includes additional factors such as:

• Assembly and Labor Costs: Devices like the iPhone 16 Pro are assembled in factories, often in countries with lower labor costs.These costs are included in the final price.
• Shipping and Logistics: Moving large volumes of devices from manufacturing plants to global markets adds costs. Shipping fees, import taxes, and customs duties all play a role in the final cost.
• Marketing and Advertising: Apple and Google spend billions on advertising, retail stores, and brand promotions to sell their products. These expenses are incorporated into the device’s final price.
• Retail Markup and Distribution: Once the device reaches retailers, it is marked up to ensure a profit margin. This includes selling the device through online platforms, physical stores, and third-party retailers.
• R&D and Licensing Fees: Significant resources are spent on research and development to create new features and improve existing technologies, all of which influence the overall cost structure.

Conclusion: What Does the BOM Tell Us?

The BOM analysis offers a fascinating glimpse into how much it costs to create the physical components of a flagship device like the iPhone 16 Pro or Pixel 9 Pro. However, the real question remains: how much does it cost to deliver these devices to consumers? When all the additional costs are factored in — from assembly and logistics to marketing and retail — the price tags on flagship smartphones like the iPhone 16 Pro and Pixel 9 Pro represent much more than just the material costs.

While the iPhone 16 Pro is more expensive to produce than the Pixel 9 Pro, it also offers cutting-edge features like a faster chip, better camera systems, and premium build quality. The decision on which device offers the best value ultimately depends on the consumer’s priorities, whether it’s performance, camera quality, or price.

Understanding the BOM is just the first step in uncovering the true cost of a smartphone