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TrendForce’s latest smartphone industry research reveals that escalating component costs—led by memory—are expected to significantly raise production expenses for Apple’s next iPhone 18 series. For the 256 GB model, the BOM cost is estimated to increase by about 38% YoY, making higher retail prices unavoidable. Apple may offset some of these costs by reducing gross margins to prevent weakening consumer demand, aiming to keep prices manageable, maintain shipment volumes, and grow market share.
An analysis of the 256 GB iPhone Pro models over the past two generations shows that memory’s share of total BOM cost has risen dramatically—from around 10% a year ago to approximately 34% in 3Q26, and is expected to exceed 40% in 1H27. This marks a fundamental shift, where the application processor (AP) and display were once the dominant cost drivers.
Driven by soaring memory prices, TrendForce estimates that the BOM cost of the 256 GB iPhone 18 Pro, scheduled for release in the third quarter of 2026, will be approximately 38% higher than that of its 2025 predecessor. If memory prices continue their upward trajectory, the BOM cost of the iPhone 18 Pro 256 GB is expected to increase even further in 2027.
TrendForce believes Apple is likely to follow the pricing strategy adopted for its recent MacBook launches by sacrificing part of its gross margin to soften price increases for the iPhone 18 lineup, helping preserve shipment volume. The company may also revisit its pricing strategy for older iPhone models, potentially raising their prices alongside the launch of the new generation to partially offset rising memory costs.
If even Apple—with its industry-leading profitability—is facing such pressure, Android smartphone vendors are likely to experience an even greater margin squeeze. Android brands will need to pass through a larger portion of rising component costs to remain profitable and avoid selling devices at a loss, resulting in steeper retail price increases than those expected for the iPhone.
The pressures will be particularly acute in the entry-level and mid-range segments, where already-thin margins leave little room to absorb higher costs. With memory prices having risen five- to sevenfold since the beginning of 2025, many brands may have no choice but to implement substantial price increases or discontinue product lines that have slipped into negative gross margins.
TrendForce therefore expects global smartphone production to remain under downward pressure from 2H26 through 2027, as persistently rising memory costs continue to weigh on market demand.
