iPhone 16 Series to Feature A18 Processor, Pricing May Match iPhone 15

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TrendForce reports that Apple's upcoming iPhone 16 series will be powered by the new A18 and A18 Pro processors and will feature a comprehensive DRAM upgrade to support Apple Intelligence. The excitement around Apple Intelligence has been building since WWDC24, and with a relatively low base in 2023, Apple’s four new models are expected to have a combined production volume of 86.7 million units in the second half of 2024, marking an 8% year-on-year increase. Looking at total production for 2024, Apple is currently close to Samsung, the market leader, and could potentially surpass Samsung by the end of the year to become the top smartphone manufacturer by market share for the first time.

All four iPhone 16 models will utilize TSMC's new 3nm process for the A18 and A18 Pro processors, breaking from the usual practice of reusing the previous generation's processor in some models. This shift is likely driven by cost considerations, as the previous generation's 3nm process (N3B) is more expensive than the current N3E process. As a result, Apple has chosen to use the more cost-effective N3E technology across all models. 

TrendForce also notes that the display sizes for both iPhone 16 Pro models will be slightly larger than those of the previous generation. Despite earlier rumors suggesting the iPhone 16 and 16 Plus would have a frame rate upgrade to 90Hz, they will remain at 60Hz. Additionally, the DRAM capacity for the iPhone 16 and 16 Plus has been upgraded, meaning all four new models will feature LPDDR5X 8GB to support Apple Intelligence.

Apple Intelligence is a major highlight of the iPhone 16 series this year. While the LLM parameters on Apple’s devices are not as extensive as those on Android phones, Apple is expected to achieve superior system integration thanks to its closed ecosystem, self-developed processors, and strong control over app development. 

The company is also focusing on improving Siri’s accuracy and has partnered with ChatGPT to boost AI performance. TrendForce points out that Apple Intelligence will gradually roll out more features and support for additional languages. However, its functionality in China remains unclear, and the lack of significant AI-centric applications could potentially impact sales of the iPhone 16 series this year.

The overall cost of the new iPhone models has slightly increased due to a significant rise in memory prices over the past year. However, considering the current downturn in the smartphone industry, Apple is expected to maintain a cautious pricing strategy. TrendForce suggests that the USD pricing for the four new models launched this year is likely to remain on par with the iPhone 15 series or see a slight increase to balance higher costs while driving sales and maintaining profitability. The iPhone 16 Pro, featuring a periscope lens, may follow last year's Pro Max strategy by starting with a base storage capacity of 256GB, which could help mitigate the perception of a price increase by offering more storage. 

TrendForce also notes that even if prices remain the same, consumer behavior—such as capturing and storing high-resolution photos and videos, downloading music and large games, and frequently installing apps—will continue to drive up demand for average storage capacity. Given Apple’s strategy of charging premiums for storage upgrades and the corresponding costs of NAND Flash, this trend could allow Apple to achieve greater profitability.