iPhone 18 Pro production costs to surge nearly 40% due to memory crisis: Apple sacrifices profit for market share

Amid the global technological crisis of 2026, Apple is facing unprecedented pressure on its supply chains. According to the latest estimates from the analytical agency TrendForce, published in August 2026, the cost of components for the flagship iPhone 18 Pro with 256 GB of memory will increase by approximately 38% compared to its 2025 predecessor. This sharp spike is driven by the rapid rise in semiconductor memory prices, threatening the traditional margin models of electronics manufacturers.

Fundamental shift in cost structure

An analysis of the Bill of Materials (BOM) for iPhone Pro models over the last two generations reveals dramatic changes. While the share of memory in the total component cost was around 10% just a year ago, by the third quarter of 2026, this figure reached a critical level of 34%. Experts predict that in the first half of 2027, the share of memory will exceed 40% of the total device cost. This marks a historical turning point: whereas pricing was previously dictated by the cost of the processor and display, memory has now become the dominant factor determining the economics of smartphone production.

Apple's strategy: maintaining volume at the cost of profit

In response to these challenges, Apple is likely to adjust its pricing policy. Analysts believe the company will follow the strategy applied during the launch of updated MacBook models, sacrificing some gross profit to prevent a sharp spike in retail prices for the iPhone 18 lineup. Such a move is necessary to maintain shipment volumes and customer loyalty. Furthermore, Apple may revise prices for older models, increasing their cost upon the release of the new generation to partially offset losses from the increased component costs in new devices.

Catastrophic consequences for the Android segment

If even Apple, which boasts the highest profitability in the industry, is forced to make concessions, the situation looks critical for Android smartphone manufacturers. Margins in this segment are already lower, leaving little room for maneuver. It is likely that Android device vendors will be forced to pass the bulk of the rising costs on to consumers, leading to a sharper rise in retail prices than expected in the Apple lineup. The initial and mid-range segments will be hit particularly hard, where low margins make many models unprofitable.

Contradictory data

While major TrendForce reports indicate a 38% increase in production costs for the base 256 GB configuration, some sources, including data on models with 1 TB of memory, report even more complex issues. Specifically, it is noted that models with maximum memory capacity are not only becoming significantly more expensive to produce but may also face performance limitations due to a shortage of high-quality memory chips. This creates a divergence in forecasts: some analysts expect a reduction in the supply of top-tier models, while others predict their complete removal from the lineup in favor of more affordable configurations.

Global smartphone market contraction

According to TrendForce estimates, the constant rise in memory prices will lead to a decline in demand in the smartphone market in the second half of 2026 and throughout 2027. Manufacturers unable to offset rising costs may be forced to discontinue entire lines of devices. Given that memory prices have risen five to seven times since the beginning of 2025, the industry is on the brink of massive consolidation, where only companies that can adapt to the new economic reality will survive.