The parts alone for the iPhone X will set Apple (AAPL) back $105 more per device more than those that went into last year's iPhone 7 Plus, Barclays analyst Mark Moscowitz suggests in a Friday report. Despite the payout, the analyst suggests that Apple will eke out high enough margins for the commemorative edition iPhone to boost the stock's value.
Shares of Apple gained 0.6% to $156.94 on Friday, as Moscowitz increased his price target from $146 to $161 per share. The stock is up 36% this year.
Apple fans can place orders for the iPhone X, which starts at $999, beginning on Oct. 27. Moscowitz calculates that the bill of materials, or the cost of all of the parts, for the new phone will come to $442.30, a 31% increase from the iPhone 7 Plus's $337.60. Royalties to Qualcomm (QCOM) , Nokia (NOK) and others will add $26 per iPhone X, he suggests, versus a $22 IP bill for the iPhone 7 Plus.
The most basic iPhone X with 64GB of memory will cost 49% more than the current $669 price for the iPhone 7 Plus with 32GB, and costs 30% more than the same iPhone 7 Plus at its launch a year ago. (Complicating the comparisons, however, is that the iPhone X does not have a 32GB model and the iPhone 7 Plus does not come with 64GB.)
The most costly new part is Samsung's (SSNLF) sleek, shiny 5.8" Super Retina OLED display, an upgrade from the previous iPhone's LCD screens. Moscowitz estimates that the new display sets Apple back $98, or 78% more than the iPhone 7 Plus display.
The components for the 3D sensing module behind Apple's face-recognition add $15, the analyst suggests. The added cost is a 100% increase from the iPhone 7 Plus, which did not have facial recognition.
Tack on $5.35 for materials and chips needed for the iPhone X's wireless charging system, which is also a 100% increase from prior phones that did not have the feature. The stabilized dual rear cameras likely cost $33, an increase of $3 or 10% from the iPhone 7 Plus's rear cameras--only one of which was stabilized.
While the bill for making the iPhone X is mounting, so is the consumer price tag. Apple is only offering the 64GB model for $999 and a 256GB version for $1,149, cutting out the mid-level 128GB device.
If shoppers are compelled to buy the higher-memory model, the payoff to Apple is substantial. "For example, we estimate that the 256GB iPhone 8 or iPhone X costs Apple $61 more in [bill of materials] than the 64GB version, while it charges consumers $150 extra, netting $89 pure profit for Apple per phone, or 59% extra margin ratio," Moscowitz wrote.
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