Inside the iPhone 18Pro: What's Driving Performance, AI, and Cost

Patrick Golfman (0:00)

Remember the chaotic old days of an iPhone launch?

People literally pitching tents on sidewalks, sleeping on cardboard boxes, and waiting 14 hours just to be the first to hold a phone?

Those lines are officially dead. Part of that is just smart tech. Everyone pre-orders on an app now, and gets it delivered to their couch. But the bigger unspoken reason? The price tag. When a phone starts approaching $1,200 and then climbs up to $1,800 for extra storage, it stops being an impulsive, exciting piece of pop culture. It becomes a calculated financial decision.

SPEAKER_2 (0:48)

Hello and welcome back to Tech Insights, the Chip Observer, home to all things semiconductor related.

And if you hadn't already figured it out, we're looking at the iPhone 18 Pro today. And that baritone voice you just heard was Patrick Golfman, one of our many specialists and analysts who's had the chance to tear into this new tech. In the following episode, our compiled excerpts from a recent webinar published on techinsights.com.

And you know what? Patrick is right. People don't camp out on sidewalks to buy a premium laptop or a major appliance. And that's exactly what the iPhone 18 has become. And along with Patrick, we also have the likes of Wayne Lamb, Rajesh Krishnamurthy, Cameron McKnight McNeil, Stacey Wegener, and Al Kowski. All experts in their own fields and all sharing their insights. And over the next few minutes, we'll get into the memory crunch reshaping the price tag. Apple's first two nanometer chip, a packaging change 20 years in the making, Apple's own modem, and the giant cooling plate hiding under the battery. Let's start with the price tag. Wayne Lam, why is memory suddenly the story behind what the iPhone costs?

Wayne Lamb (2:07)

Apple has been very public this year about the need to raise prices of devices due to the memory storage driven by the AI data center boom. TechInsights estimates that memory component prices could add up to about $150 in bill of materials.

And given that Apple is only charging $100 retail premium, it suggests that Apple is sharing some of the bomb cost increases, which inevitably will decrease its gross margins. Naturally, the iPhone 18 Pro memory configuration remains unchanged from last year to keep the bill cost down.

SPEAKER_2 (2:40)

So if they've kept the same configurations as last year, what's the hardware behind it?

Wayne Lamb (2:45)

All Apple iPhone 18 Pro models uses 12 gigabytes of LPDDR5X DRAM, a faster version. For the storage, Apple uses QLC quad-level cell NAND flash memory in the 1TB and 2TB storage variants of the iPhone 18 Pro and Pro Max, while keeping the faster TCL triple-level cell NAND in the 256 and 512 models.

SPEAKER_2 (3:09)

And you said Apple is using quad-level cells. Can you give us some more insight on this?

Wayne Lamb (3:13)

QLC offers a higher storage density, especially in the 1 and 2TB, by using fewer physical silicon dye. This results in lower bomb costs for those higher storage variants and demonstrates the sourcing decisions amidst this current memory cost crisis.

SPEAKER_2 (3:29)

So what we're seeing is Apple is balancing performance and cost by pairing 12 gigabytes of LPDDR5X memory with a mix of TLC and higher density of QLC storage, using QLC and larger capacity models to reduce memory costs.

Staying with memory, I want to ask Alkowski a quick question about component pricing. Just how big has the memory swing been?

Al Kowski (3:55)

In the past 12 months, NAND has increased by a factor of 2 and DRAM by a factor of 4.5. This is a market-wide impact caused by the expansion of data servers worldwide and it sees no signs of decreasing down to last year's level.

SPEAKER_2 (4:12)

And quickly back to Wayne. Memory isn't only a cost line. It's also what on-device AI runs on. Did the Crunch hold Apple back there?

Wayne Lamb (4:20)

Another element enabling mobile AI is DRAM density. Apple Intelligence can only run on iPhones with at least 8GB DRAM. While this configuration is more efficient than comparable Android systems, which require 12GB of RAM to run Google Gemini, it stands to reason that the higher the DRAM density, the better user experience. However, due to the current memory cost environment, Apple had withhold additional DRAM increases in the iPhone 18 Pro.

SPEAKER_2 (4:46)

And if you can, zoom out for us. What does this year's lineup say about where Apple wants the iPhone to sit?

Wayne Lamb (4:52)

From a strategic market perspective, both the pricing signal and the product makeshift of this year's product lineup highlights Apple's desire to move the iPhone category into a higher price regime.

SPEAKER_2 (5:04)