In a recent research report, technology analysts expect that the iPhone 15 Pro series will introduce a price hike due to a total upgrade of the device. The last time that the iPhone saw a price hike was back in 2017 with the iPhone X. Since the release of the iPhone Pro series, it has been available in the US for the same starting price ($999) as the iPhone X. The iPhone series will see price rises of varied degrees practically every year after entering the Chinese market. In actuality, the overall cost of an iPhone hasn’t increased significantly in recent years. Instead, a separatist party started to attack the high-end market after the local mobile phone market went through a period of growth.
Early on in the history of Chinese mobile phones, the Redmi series, priced at 799 yuan ($116), wiped out the home market for fake phones. Also, the Xiaomi series, priced at 1,999 yuan ($290), surprised many global brands. Yet, even “moderate” mobile phones plainly cannot fulfil the high standards of more users given the ongoing expansion and demand of the mobile phone market
This is also one of the factors that allowed the iPhone to completely dominate the high-end market by itself. The iPhone has insanely attracted users from all over the world, thanks to its superior self-developed hardware and software that together constitute a rock-solid moat.
Chinese brands joined the flagship agenda
Wherever Chinese brands focus, that seems to pass as the “Android choice”. This is because the number of Chinese Android phones is much more than those of non-Chinese. Apple and Samsung were basically alone in the global flagship mobile phone market. However, Chinese brands soon realized that they were pure “assemblers” without their own tech. They realized that the bulk of the cash in the mobile phone market is moving outside China. Thus, they slowly put the flagship Chinese mobile phones on their agenda.
The notion that flagship mobile phones are highly costly reflects in the prices of these phones. From 1999 yuan ($290) at first to 3999 yuan ($581), then to 5999 yuan ($872), until it hit 10,000 yuan ($1,453). This is the result of the combined impact of Chinese mobile phones on the high-end market. Mobile phone prices are rising, but this has also led many users to wonder whether it is really worthwhile to spend so much money on a Chinese flagship mobile phone.
One of the challenges faced by high-end Chinese mobile phones was these doubts. Chinese brands initially could only gain a share of the mid and low-end due to the invasion and suppression of global high-end brand models. But today, they are slowly taking the high-end discourse power.
Exclusive Tech
For mobile phones to be called flagships, these devices need to come with their exclusive tech. It is not about stacking the hardware, there need to be some internal tweaks. This means that these devices will cost more money.
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It’s also true that more brands are starting to self-develop techs, from IC chips to mobile phone chips. This is necessary to deepen the integration of software and hardware to open up a new track. Chinese high-end models have only recently started to take shape. High-end models’ prices have nearly doubled in only a few years due to the inherent high costs of labor and R&D that come along with the launch of these cutting-edge techs.
Consider the chips found in mobile phones. TSMC, the top foundry in the world right now, recently launched the 3nm process tech. Even if the semiconductor industry is becoming more depressed, Apple, Intel, Qualcomm, MediaTek, and Intel have already reserved TSMC’s production capacity for 23 to 24 years in the future. The benefit of tech leadership is currently being seen in TSMC’s foundry industry, which is still booming.
Based on this, TSMC’s foundry prices have also increased to all-time highs, and the price of a 3nm 12-inch wafer has surpassed the previous record of 20,000 US dollars. What kind of idea is this? A 3nm chip has an area of around 70 square millimeters compared to a 12-inch wafer’s estimated area of 70659 square millimeters. Only 1,000 chips can be cut, assuming TSMC has a 100% yield rate and no scrap wastage.
Chip cost rises
The trend in the chip market will not make mobile phones cheaper. TSMC is way ahead and this is not good for competition. TSMC’s 3nm yield rate is 90% which is already very high. T here are claims that Samsung’s 3nm yield rate is merely 20%. The foundry charge for each chip might be as high as $30, assuming that TSMC’s foundry fee of 20,000 US dollars can cut seven hundred or eight hundred chips.
Because of this, 3nm process chips will eventually cost more than $150, with a portion of this cost being passed on to users. If we look back at TSMC’s foundry costs over time, we can see that they were just $2,000 for 90nm circuits in 2004 and rose to $6,000 for 10nm chips in 2016. It has already hit $16,000.
When we look at rising mobile phone cost, chip cost increase is only one aspect. Mobile phone brands from China are now entering different tracks. We have seen the launch of Huawei’s XMAGE imaging division. It will keep upgrading its camera tech with its excellent R&D skills. The cutting-edge tech that mobile phones, particularly high-end flagships, pursue must need vast human and financial resources. Therefore the price increase of high-end models is all but unavoidable given the ongoing advancements in tech.
Android mobile phones have many powerful flagships
Chinese brands have recently launched a strong drive towards the high-end market with their own R&D capabilities. Whether it be the Xiaomi MIX, which astounded everyone in the full-screen era, or the vivo NEX and OPPO Find X, which later provided new solutions. Chinese mobile phones are doing quite well.
At the same time, Chinese models’ ongoing improvements in charging capacity and more advanced imaging systems are a focused representation of homegrown technologies in recent years. Domestic high-end models are currently in the rising stage, and the future scenario will become increasingly evident, despite the fact that there are still some flaws in the existing models.
