New iPhone likely $100 more expensive due to AI scarcity

Apple will have to deal with a significant increase in costs. According to research firm TrendForce, the memory costs for the iPhone 18 Pro have increased by almost 400 percent in one year. As a result, a price increase for the new iPhone seems increasingly likely.

Apple is expected to make the iPhone 18 Pro about $100 more expensive than the iPhone 17 Pro next week. That's far less than some previous estimates, which talked about $250 to $300. Still, it's an important signal.

Apple also cannot fully absorb inflation in the chip market.

The core of the problem is memory. Due to the huge demand for AI infrastructure, the market for memory chips has become much tighter. This affects not only data centers and AI servers, but also consumer products such as smartphones, tablets and laptops.

TrendForce states that Apple can try to reduce costs elsewhere in the chain, but that this is probably not enough to fully compensate for the increase in memory costs.

This leaves two options. Apple can reduce the margin, or pass on part of the costs to consumers. According to the report, the latter is becoming increasingly difficult to avoid.

It is striking that Apple has largely spared iPhone buyers so far. In June, the company already raised the prices of Macs, iPads and Apple TV models. Apple then indicated that it had postponed that step for as long as possible.

Now it seems it's the iPhone's turn as well. That's sensitive, because the iPhone is still Apple's main revenue driver. Higher prices can protect margins, but they can also force consumers to do longer with their old device.

This is important for investors. As upgrade cycles get longer, that can put pressure on future iPhone sales.

The irony is that Apple itself is under pressure to strengthen its AI story. New iPhones need to become more powerful, get more memory and be better suited for AI applications on the device itself. But it is precisely this development that makes the hardware more expensive.

So the AI boom isn't just creating opportunities for Apple. It also increases production costs. Apple can try to mitigate the blow with lease and upgrade programs, with consumers spreading the higher price via monthly payments. This can limit the psychological pain of a higher selling price.