iPhone 18 Pro Max may top W3m — but Apple's margins could shrink

The top-spec Apple iPhone 18 Pro Max, expected to launch in September, could carry a price tag exceeding 3 million won ($1,990) in South Korea — yet Apple may actually see its gross margins shrink on the device. Rising memory chip and 2-nanometer semiconductor costs are set to push component expenses roughly $300 higher than on the previous model, meaning a higher retail price may not be enough to protect profitability.

According to market research firm Counterpoint Research, the bill of materials for the iPhone 18 Pro Max in the 12GB/1-terabyte configuration is expected to rise by about $300 — roughly 450,000 won — compared with the equivalent iPhone 17 Pro Max model.

The bill of materials, or BoM, represents the combined cost of key components and materials that go into a product. It excludes labor, logistics, research and development, marketing and retail margins.

The BoM for the iPhone 17 Pro Max 1TB model is estimated at around $550 — roughly one-third of its US retail price of $1,599. The iPhone 18 Pro Max, by contrast, is expected to see component costs climb to between $850 and $900.

The iPhone 17 Pro Max 1TB model currently retails for 2.59 million won in South Korea. If a significant portion of the iPhone 18 Pro Max's higher component costs is passed on to consumers, the domestic retail price could exceed 3 million won.

The cost pressure looks even sharper when viewed against US pricing. If Apple raises its average selling price by $200 to $1,799, component costs would account for roughly 47 to 50 percent of the retail price — up from about one-third for the previous model, approaching half.

Memory chips are the single biggest driver of the cost increase. The spread of generative AI has pushed up prices for both DRAM and NAND flash, with NAND costs alone for the 1TB model potentially exceeding $250. A 2-nanometer application processor and upgraded camera components are expected to add further cost pressure.

Apple may raise prices more steeply on high-capacity models, but defending profitability will not be easy. Counterpoint projected that even a $200 increase in average selling price would fall short of offsetting the $300 rise in component costs, leaving the gross margin slightly below that of the previous model.

However, both the retail price and the BoM for the iPhone 18 Pro Max remain estimates, not confirmed figures. The actual cost ratio will depend on the final specifications and launch price.

rim@heraldcorp.com