Apple's recent release of the budget smartphone 'iPhone 16e,' which saw a price increase of about 40%, indicates a potential price increase for the forthcoming 'iPhone 17' expected to launch in the latter half of this year. Many analysts view this as Apple expressing its intent to improve performance through product price increases amid declining sales. Furthermore, concerns have been raised that the impact of the tariff policy stemming from the Trump administration could lead to even larger price increases for the iPhone.
On the 19th (local time), Apple revealed that the price of the iPhone 16e is $599, representing an increase of about 40% compared to its predecessor (iPhone SE3, $429). This price is approximately $100 higher than the estimated price of $500 predicted by UBS analyst David Vogt. The previous generation, iPhone SE3, was priced at 51.7% of the flagship model (then the iPhone 14), while the iPhone 16e has risen to 72.2% of the price of the iPhone 16. The Wall Street Journal noted that "the most surprising element of this product announcement was the price."
Analysts suggest that the price increase of the iPhone 16e is related to the recent decline in iPhone sales revenue. Although Apple's overall revenue grew in the fourth quarter of last year, iPhone sales amounted to $69.14 billion, down about 1% from the previous year. For fiscal year 2024 (covering from October 1, 2023, to September 30, 2024), iPhone revenue is projected to decrease by about 2% compared to 2022's $205 billion, amounting to $201 billion. The iPhone is a core product that accounts for half of Apple's total revenue. Apple has kept iPhone prices frozen since 2021. An IT industry insider remarked, "Although Apple has managed to hold the iPhone price steady for four consecutive years, the recent decline in iPhone sales has prompted them to increase the price of the iPhone 16e to improve performance."
There are discussions within and outside the industry suggesting that Apple's price increase for the iPhone 16e is a precursor to a price hike for the upcoming iPhone 17. The IT media outlet 9to5Mac reported, "Apple's recent release of the iPhone 16e model with significantly increased pricing suggests that the price of the upcoming iPhone 17 series may also rise," adding that "all models within the iPhone 17 series could become up to $100 more expensive." Forecasts predicting a decline in iPhone sales support this assertion, as Apple's need to raise iPhone prices seems inevitable for performance maintenance. According to financial information firm Visible Alpha, Apple's iPhone shipments for the fiscal year 2025 are expected to decrease by about 3% compared to the previous year.
The key issue is the extent of the price increase. The influence of the tariff policy from the Trump administration has made it more difficult to gauge the level of iPhone price increases. Considering the impact of tariffs, discussions suggest that an additional price increase of at least 10% from the original intended iPhone price is unavoidable. Bank of America (BofA) analyst Wamsi Mohan analyzed that under the assumption that all Apple products will face at least a 10% tariff, Apple may need to raise prices for iPhones, iPads, and other products by at least an additional 9%.
There are concerns that expectations of lowering iPhone prices through Apple's self-developed 5G (fifth-generation mobile communication) modem chip (C1), which could replace Qualcomm's modem chips that have incurred billions of dollars in costs annually, may not apply to the iPhone 17. This is due to the remaining supply contract with Qualcomm for 5G chips lasting until 2026. The Wall Street Journal stated, "Apple has equipped the iPhone 16e with its own modem chip for the first time. If there are no significant issues, about 20% of the iPhone 17, set to be released in the second half of the year, will be equipped with the in-house modem chip," noting that "the replacement of Qualcomm chips could be completed within two years."
Meanwhile, if Apple raises the price of the iPhone 17, there is a significant possibility that its competitor Samsung Electronics will also increase its prices. Due to Apple's price freeze policy, Samsung has been unable to raise product prices adequately over the past four years despite rising component costs, leading to decreased profitability. Last year, Samsung Electronics' MX division (including network business) revenue totaled 117.3 trillion won, a 4% increase compared to the previous year; however, operating profit actually fell by 2.4%.