Market Overview

Apple To Offset Increased 5G iPhone Costs With Cheaper Battery Design: Analyst

Apple To Offset Increased 5G iPhone Costs With Cheaper Battery Design: Analyst

Apple Inc (NASDAQ: AAPL) is offsetting the increased costs resulting from the addition of 5G hardware to its next-generation iPhones by cutting costs on the batteries it uses, according to analyst Ming-Chi Kuo, as reported by MacRumors.

What Happened

The Cupertino, California-based technology giant faces increased costs due to the addition of the millimeter wave technology to its new iPhones, which will cost it between $125 and $135 per unit. Adoption of sub-6GHz 5G technology will further increase the cost by $75 to $85 for each device, the analyst theorized, as per MacRumors.

The increased costs will be countered by reducing the number of layers in the iPhone’s battery board and placing the cell components in a smaller area, Kuo claims. 

The resulting savings are thought to be in the region of 30-50% compared with iPhone 11 boards, as per the analyst. 

Kuo said that cost-cutting measures are also likely to apply to the batteries of the third-generation AirPods, due to be released in 2021, as Apple will use a “system-in-package” design used in AirPods Pro. 

Why It Matters

The Apple analyst previously said the latest iPhones may not come with the usual EarPod earphones or a power adapter, the Verge reported

The Tim Cook-led company’s Chief Financial Officer Luca Maestri disclosed at the company’s earnings call in July that the iPhone 12 models would be delayed by a “few weeks.”

Wedbush analyst Daniel Ives has suggested that 5G "constituted a major cycle" for Apple, as around 350 million iPhones are currently in an upgrade window. 

Price Action 

Apple shares closed nearly 2.2% higher at $473.10 on Thursday and rose almost 0.7% at $476.55 in the after-hours session.

Latest Ratings for AAPL

Nov 2020Loop CapitalUpgradesHoldBuy
Oct 2020Raymond JamesMaintainsOutperform
Oct 2020Piper SandlerMaintainsOverweight

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