The rising costs are terrifying! Apple cuts one-third of iPhone 17 production capacity on some production lines

Kuai Technology reported on July 11 that according to blogger Dingjiao Digital, Apple has made very serious expectations about the consequences of hardware cost increases. Starting this week, some production lines of the iPhone 17 standard version will be shut down from the original 15% production reduction to one-third. The blogger also emphasized that this production reduction has nothing to do with the production schedule of the new generation iPhone 18. The core inducement is the pressure on profitability caused by the skyrocketing cost of upstream parts and components. This round of soaring hardware costs is called a component cost tsunami in the industry. The root cause is the expansion of global AI computing infrastructure. Storage manufacturers such as Samsung and SK Hynix have tilted most of their advanced production capacity to supply HBM memory for servers. The supply of DRAM and NAND flash memory for mobile phones continues to be in short supply, and contract prices have increased significantly for several consecutive quarters. Superimposed on the fact that TSMC's 3nm production line has been crowded out by AI chip orders, the foundry cost of the A19 chip installed in the iPhone 17 has simultaneously increased. The dual pressure continues to compress the profit margin of the entire machine. Apple previously relied on long-term price lock agreements to hoard low-price components to stabilize the prices of Mac, iPad, and iPhone terminals. This inventory has been completely consumed in the second quarter of this year, and subsequent purchases can only accept high spot prices. Apple officials have publicly stated that they have never seen parts prices rise at the current level. Previously, the Mac and iPad product lines have completed global price increases, and the iPhone series previously chose to absorb costs alone. Now the profit margin of the basic model is approaching the red line, and the risk of inventory losses can only be avoided by cutting production capacity. As the main model in terms of sales, the iPhone 17 standard version has much lower hardware profits than the Pro series, and is more sensitive to price increases in storage and chips. If the original production capacity is maintained and production continues, the terminal will either increase in price significantly and lose ordinary consumers, or continue to suffer losses. After internal evaluation, Apple chose to shrink the scale of the production line to balance supply volume and profitability. Industry organizations analyze that this production cut is a prelude to Apple's price adjustment. When the iPhone 18 series is released in September, there is a high probability that the entire product line will increase prices simultaneously to pass on the long-term cost pressure on the upstream.