Apple is expected to launch the iPhone 18 Pro and iPhone 18 Pro Max in September, along with its first foldable iPhone. However, the new models could arrive at a time when Apple is facing rising component costs, particularly for memory, storage and advanced processors. Memory prices have surged sharply over the past year, with DRAM costs reportedly increasing by around 400% and NAND prices by more than 300%. At the same time, Apple is expected to use a new 2nm-based A-series chip for the iPhone 18 lineup, which could further increase production expenses.
Apple CEO Tim Cook had previously warned that higher prices were becoming unavoidable. The company has already increased prices for several Macs, iPads and other products, including some significant hikes in India. The iPhone lineup has so far avoided similar increases, helping Apple maintain strong demand even as the broader smartphone market struggles.
Counterpoint Research estimates that global smartphone shipments declined 11% year-on-year in the second quarter of 2026, the weakest second quarter since 2013. Apple, however, recorded 3% shipment growth and captured a 20% market share, its strongest Q2 performance on record. The company's tablet business tells a different story. Global tablet shipments dropped 9.9% during the same period, according to Omdia, while Apple's iPad shipments declined by roughly 7.5%.
The rising cost of components could eventually force Apple to increase iPhone prices. Counterpoint estimates that the bill of materials for a high-end iPhone 18 Pro Max with 12GB RAM and 1TB storage could rise by nearly $300 compared with the previous generation. Costs for 256GB and 512GB versions could also increase by around $200-$250.
Apple may not pass the entire increase directly to customers. Instead, the company could adopt different pricing across storage configurations, with smaller increases for entry-level models and larger increases for higher-capacity versions. This would allow Apple to protect its margins while keeping the starting price relatively competitive. Apple's strong position in the premium smartphone market could also help it absorb higher prices. Counterpoint says smartphones priced at $600 or above accounted for 29% of global smartphone shipments in the first half of 2026, up from 25% a year earlier. Apple and Samsung together controlled 84% of this premium segment.
India is another example of Apple's pricing strength. In 2025, Apple accounted for 9% of India's smartphone shipments and 28% of the market by value. The iPhone 17 also became India's best-selling smartphone by volume during the first quarter of 2026, despite starting at Rs 82,900. Financing and EMI options could further reduce the impact of a higher price tag. Counterpoint expects financed purchases to account for 42% of India's smartphone sales in 2026, compared with 35% in 2025. For consumers, spreading a price increase over several years can make a more expensive phone appear more affordable on a monthly basis.
Apple can also rely on its services business to offset some hardware-related costs. Counterpoint estimates Apple's services business at around $120 billion and believes artificial intelligence services could eventually create another major source of recurring revenue. Any potential AI subscription pricing, however, remains a research scenario rather than an announced Apple plan.
Apple may also attempt to negotiate better terms with suppliers and reduce costs in areas such as displays, cameras, materials and packaging. However, increasing demand from data centres and other industries is putting additional pressure on chip and memory supplies, limiting Apple's ability to control costs. As a result, the iPhone 18 Pro series could become more expensive, but Apple has several ways to limit the impact on consumers. The company may keep lower-end configurations relatively close to current prices while placing larger increases on premium storage variants. Whether higher prices hurt demand will ultimately depend on how aggressively Apple passes its increased production costs to consumers. Given the company's strong premium-market position and continued demand in markets such as India, a moderate price increase may not significantly affect sales.
Disclaimer: This image is taken from Bloomberg.
