Why iPhones Will Probably Get Even More Expensive

**Ryan Knutson** (0:05)
The other day, our colleague Rolfe Winkler got on the phone with Tim Cook, the outgoing CEO of Apple. Cook had a message he wanted to get out.
What was the bombshell that he dropped in your conversation?

**Rolfe Winkler** (0:18)
They're gonna raise prices. He told me they're gonna raise prices.
When I asked, which devices? When? How much? Ah, we're still working through those details, is what he told me. But, look, I would suspect soon and plenty.

**Ryan Knutson** (0:37)
When the new iPhone drops in September, one analyst estimates that it could cost an extra $200, or even more.

**Rolfe Winkler** (0:45)
The two words no Apple fan wants to hear, price increase.

**Ryan Knutson** (0:49)
Since Rolfe broke the news last week, customers have heard Tim Cook's message loud and clear.
If you're thinking about buying a new Apple product, I would do that right now. Oh, your next iPhone could cost you a lot more.

**SPEAKER_3** (1:02)
Apple just announced they are doubling down on keeping people from buying iPhones in the future.

**SPEAKER_4** (1:06)
What? The prices were already pretty raised.

**Ryan Knutson** (1:12)
Did Tim Cook seem worried about sharing this update?

**Rolfe Winkler** (1:16)
He's always a smooth operator. He's always kind of in command and on message, right? He had a couple key points he wanted to make, and he made those points, price increase is unavoidable.

**Ryan Knutson** (1:30)
How big of a deal is it for Apple to do something like this?

**Rolfe Winkler** (1:35)
They raise prices all the time, sort of in subtle ways. But I think the reason they're doing this interview is because it's not going to be subtle this time.

**Ryan Knutson** (1:45)
Ouch.

**Rolfe Winkler** (1:46)
Yeah, I was shitting.

**Ryan Knutson** (1:50)
Welcome to The Journal, our show about money, business and power. I'm Ryan Knutson. It's Monday, June 22nd.
Coming up on the show, why Apple products are about to get even more expensive.

**SPEAKER_4** (2:17)
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**Ryan Knutson** (2:57)
What is the thing inside the iPhone that's causing it to get so much more expensive?

**Rolfe Winkler** (3:02)
Two components, memory and storage. So if you want to analogize this to...

**Ryan Knutson** (3:09)
Love a good analogy, yes, please.

**Rolfe Winkler** (3:10)
Did I use that verb correctly?

**Ryan Knutson** (3:12)
Analogize, sure, why not? Rolfe's analogy is that of an old office, like one from the 1960s.

**Rolfe Winkler** (3:23)
In that office, there was no computer. There was a desk and there was a filing cabinet behind it, right? The desk space is analogous to memory on your phone. It's all of the papers you need right now to complete whatever task you're working on, right?

**Ryan Knutson** (3:38)
Got it.

**Rolfe Winkler** (3:40)
The DRAM or RAM is the memory. It'll say eight gigabytes or 12 gigabytes. That's the size of the desk, and it's what the phone needs to run the apps you're using right now.
The filing cabinet behind you is storage, right? For everything else. So when you buy an iPhone, if they're marketing 256 gigabytes to you, that's the filing cabinet, that's the storage, that's the photos in the video locker, right? Desks are more expensive than filing cabinets, and the cost of both of those quadrupled.

**Ryan Knutson** (4:18)
For last year's iPhone 17 Pro, it cost Apple about 50 bucks to buy those desks and filing cabinets, or memory and storage chips. But according to the research from Tech Insights, for the upcoming iPhone 18 Pro, the chips will cost Apple four times that.
That's a huge increase.

**Rolfe Winkler** (4:37)
Huge increase, it's spectacular.

**Ryan Knutson** (4:39)
So what's causing this price increase in chips?

**Rolfe Winkler** (4:42)
One force, AI.

**Ryan Knutson** (4:44)
At it again, AI.
AI companies use basically the same kind of chips that Apple does, to do things like train and run large language models and coding agents. Those companies are asking for a lot of chips to build out their AI dreams.

**Rolfe Winkler** (5:02)
Google, Microsoft, Amazon, Meta, plus Nvidia, these guys are buying, to torture our analogy, desks and filing cabinets, memory and storage. They're buying huge amounts to go into those AI servers.
They put it in the AI servers so that the AI can work its magic.