More Powerful Components Driving Up Smartphone Prices

More Powerful Components Driving Up Smartphone Prices

As smartphone manufacturers are pressured to make their latest releases better than the last to compete for market share, this is driving this cost upward for each device. New features are being introduced, like more memory, faster chips, top of the line cameras and high definition displays. The top three smartphone makers for Q3/2017 include Samsung, with 23% of the market, Apple, with 12% of the market and Huawei with 11%.

Apple has recently introduced their new flagship phone, the iPhone 8 and 8 Plus. Reports have shown this device carries a bill of materials (BOM) at US$295.44; higher than any previous versions of Apple’s smartphones. In competitive comparison, the recently released Samsung Galaxy S8 is also equipped with 64 GB of NAND flash memory and carries a BOM of US$301.60. Major cost drivers for these smartphones include new chips, displays and camera updates.

Chips

The Galaxy S8 and S8 Plus are the first smartphones on the market capable of gigabit-LTE speeds, featuring a 10-nanometer (nm) system-on-chip (SoC) along with CAT-16 LTE modem and radio. One of the main upgrades for the iPhone 8 and 8 Plus is the new A11 Bionic Chip, featuring 6-core 64-bit manufactured using new 10nm process, which means this phone runs about 30% faster than its predecessor. This is setting the pace for what phones will require in the future as Artificial Intelligence applications are emerging.

Display

LCD displays are very common in phones on the market today, but the upcoming iPhone X will feature an edge-to-edge OLED display. However, the iPhone 8 will still support HDR rendering for the highest visual quality on a phone. The Sumsung Galaxy S8 sports a 5.8-inch 2960×1140 AMOLED display, featuring an additional 15% more pixels than previous Samsung phones.

Camera

The new iPhones are known to have the highest quality cameras on the market, featuring new sensors with dual lenses featuring f1.8 and f2.8 apertures. This is much brighter than the previous 7 Plus telephoto. Slow motion video capture at 1080p is also smoother, at 240 frames per second; double from the previous 7 Plus. The new Samsung Galaxy S8 is lacking with its single lens camera. Even the LG G6 and many Chinese OEMs are now promoting dual cameras as a key feature.

With all these new features, the price of the Samsung Galaxy S8′s BOM is US$43.34 more than that of its predecessor, while the iPhone 8 Plus’s BOM is US$30 higher than the iPhone 7 Plus. The market will only see an increase in price from here, as new features and technologies are released.

Advanced MP Technology is a full service global distributor of electronic components and provider of supply chain solutions. Our highly-trained market intelligence team allows us to follow and prepare for changing trends in the market. With 39+ years in the business, our industry relationships and reliable staff have proved our success in this quickly-changing and evolving market.