On March 5, Apple recently launchedThe low-priced mobile phone iPhone 17e and the low-priced laptop MacBook Neo.The Wall Street Journal pointed out that in the context of rising memory chip prices,Apple wants to leverage its strong supply chain advantages to compete for more share in the low-priced mobile phone and laptop markets.
MacBook Neo
Analysts say soaring memory chip prices this year will hit the electronics market hard. Apple's pricing strategy for its latest devices shows it wants toTake advantage of your competitors' woes to increase your global market share.
When Apple released its new entry-level iPhone 17e on Monday, it set the starting price at $599, the same as last year's model. The entry-level MacBook Neo notebook released by the company on Wednesday is also priced at $599, which is lower than some analysts expected. Although the rising cost of memory and storage chips may eat into Apple's profits, the company still maintains its low-price strategy.
Opponent suffers more
However, these cost increases may be more painful for Apple's competitors. Chinese mid-range smartphone makers may be forced to raise prices. Consumers who previously shunned Apple devices because of their higher prices and opted for cheaper products will have even more reason to switch to Apple.
"Apple is entering attack mode. They see the memory crisis as an opportunity to increase market share," said Francisco Jeronimo, vice president of research firm IDC. "All other smartphones in the same price range will face price increases."
iPhone 17e
This creates opportunities for consumers to switch from Android to iOS, and from Chromebooks and PCs to Macs, he added.
Apple may use the low-priced iPhone 17e to target mid-range Android models from Xiaomi, OPPO and Honor in the Chinese market.As the prices of these models increase, the price gap between them and the iPhone 17e is narrowing, especially with Apple offering a 24-month installment plan in China.
Following the success of the iPhone 16e in Japan and the United States, the iPhone 17e is also expected to perform strongly in these two countries.
Apple has also doubled the iPhone 17e’s base storage capacity compared to last year’s model. While this adds value to consumers, it also further compresses its own profit margins.
IDC predicts that due to soaring costs and memory shortages, the global smartphone market will suffer its largest decline in history this year, with shipments expected to fall by 13%. Prices for both memory and storage chips have risen due to strong demand for AI servers that also use these components. Memory helps apps run faster, while storage is used to save photos, videos, and other files on the device.
IDC said the biggest impact will be on the lowest-priced Android devices, which will no longer be profitable to manufacture. PCs and Chromebooks are facing similar cost pressures, with IDC forecasting an 11% decline in shipments in this market this year.
Apple executives say the company is not immune.Apple CEO Tim Cook said on the last earnings call that Apple is seeing "significant price increases in the memory market." Starting this quarter, Apple's profits will be more significantly affected, he said.
Price increases for high-end products
To offset the hit to profit margins from lower-priced entry-level devices, Apple could raise prices on its higher-end products, as it did on Tuesday when it unveiled new MacBook Pro and MacBook Air laptops.
Analysts said Apple's adoption of a similar strategy across its smartphone lineup could mean price increases for some of the iPhone 18 models due to be released this fall.
Bernstein Research estimates that manufacturing costs for the iPhone 18 Pro Max models expected to be released this fall will rise by 25%, an estimate that takes into account rising costs for memory, storage and processor chips. Even so, the agency believes Apple will still go on the offensive.
"Given the unprecedented shortage of memory, Apple has a unique opportunity to capture share from low-end Android phone manufacturers that cannot obtain enough memory," Bernstein analyst Mark Newman wrote in a note to clients this week.
As of press time, Apple had declined to comment.