Apple to Launch New iPhones with a Budget Version due to Cost Reduction of Components

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According to TrendForce, the sales of Apple’s iPhone 8, 8 Plus, and X that were released in 2017 were lower than expected for models that celebrate 10th anniversary of the iPhone line. Sales of the iPhone 8/X series were affected by the delayed launch. Moreover, the demand for iPhone X has not been as strong as anticipated because consumers still need time to adjust to the high prices. While the market performance of the iPhone 8/X series has fallen short of the high expectations, iPhone sales as a whole are sustained by the popularity of models from the earlier generations. TrendForce finds that total iPhone sales for the whole year of 2017 reached around 216 million units, roughly the same as the annual figure for 2016.

Similarly, the company plans to introduce three new iPhone models later this year, says TrendForce. All three models would continue to feature Face ID, and two of them would be premium versions with an AMOLED screen. Apple Pencil would be offered as an option as well. With the production volume estimated by TrendForce at around 83~88 million units, the new iPhones to be released may take a larger share of the company’s annual sales volume compared with the three models last year. For 2018, TrendForce expects the sales volume of iPhones to remain flat or grow marginally by 2~3%, influenced by the saturated smartphone market and the longer replacement cycle of phones across the world. In the global revenue ranking, Apple would retain its second position, following Samsung.

Specs and Pricing Strategies of New iPhones

In terms of tech specs, the new iPhones may include two AMOLED versions, with a size of 5.8-inch and 6.5-inch respectively, as well as a less expensive 6.1-inch version with an LCD screen. The two premium models with AMOLED screen have already been assembled in the OEMs since late July, while the assembly of the LCD models is scheduled at mid-September. All three models are expected to be shipped in September and October as previously scheduled.

Regarding the prices, TrendForce believes that Apple is bound to adjust its pricing strategies, influenced by Chinese brands that have successfully expanded their market shares with products that offer high performances at affordable prices. Moreover, Apple will need to improve its cost structure to cope with the threats brought by Android brands. In order to maintain its profitability, Apple is said to bargain with its supply chain partners for cost reduction of components, especially the components that have been used in earlier generations of iPhone.

For the budget 6.1-inch LCD version, it will come with Face ID, Dual-SIM function, and a larger screen than its predecessor iPhone 8. The specs upgrades would make new iPhones more favorable in the competition with Android phones. On the other hand, the cost of this model has been approaching that of iPhone 8 Plus due to the upgrades. However, the 6.1-inch LCD model would be positioned by Apple’s main product this year, with a production share of around 50% in the new iPhone series. Apple is bound to adjust the prices of this model to meet the market expectation and to further expand its market share. Considering the cost reduction of components, TrendForce estimates the starting price of this LCD version at around $699-749.

As for the two premium AMOLED versions, they would both feature a memory content of 4GB. The 5.8-inch one would come as the successor of iPhone X, but with a lower starting price of $899~949, notes TrendForce. With the anticipated launch of this model, iPhone X will start its “end of life” process earlier due to the high similarity in the specs of these two models.

The 6.5-inch AMOLED version would target at the premium business segment, with an extra-large screen and Dual-SIM service, but the Dual-SIM function is expected to be available only in certain regions. Limited within US$1,000 threshold as to encourage purchasing from consumers, the starting price of the premium AMOLED iPhone for 2018 will likely to be the same as that of iPhone X, at US$999, according to the prediction of TrendForce.

About TrendForce

TrendForce is a global provider of the latest development, insight, and analysis of the technology industry. Having served businesses for over a decade, the company has built up a strong membership base of 435,000 subscribers. TrendForce has established a reputation as an organization that offers insightful and accurate analysis of the technology industry through five major research divisions: DRAMeXchange, WitsView, LEDinside, EnergyTrend and Topology. Founded in Taipei, Taiwan in 2000, TrendForce has extended its presence in China since 2004 with offices in Shenzhen and Beijing.