The iPhone 16e, starting at $599 for its basic storage option, may not truly qualify as Apple’s budget-friendly model. However, recent analyses indicate that Apple is making notable strides in decreasing its reliance on third-party suppliers such as Qualcomm. This shift not only enhances the company’s command over its hardware but also facilitates cost reduction for materials. Remarkably, compared to the previous iPhone SE (2022) and the standard iPhone 16, the iPhone 16e integrates the highest proportion of components produced in-house. The inclusion of the custom C1 5G modem is a key factor that enables Apple to save approximately $10 per unit—a seemingly modest amount that warrants further exploration.
Potential Savings of $220 Million with the iPhone 16e
Assuming Apple meets its shipment goals, it could realize savings of up to $220 million on the iPhone 16e thanks to the efficiencies brought by the C1 5G modem. While it does not support mmWave networks, this modem outperforms Qualcomm’s Snapdragon X71, which is found in the iPhone 16 series, demonstrating a 40% performance improvement in several scenarios. Produced using TSMC’s advanced 4nm manufacturing process, the modem enhances efficiency significantly, while the associated transceiver still relies on the older 7nm technology. This strategic move to develop an in-house baseband chip allows Apple to achieve those estimated $10 savings per unit, as reported by Counterpoint Research.
Notably, 40% of the components within the iPhone 16e are sourced directly from Apple, with the remaining 60% coming from external manufacturers. Despite these cost efficiencies, the device reflects some compromises in its feature set. For instance, it is equipped with a singular rear camera and lacks MagSafe wireless charging capabilities. The question remains whether Apple plans to pass these savings on to consumers or if it intends to reinvest the reduced costs into other product lines.
According to Ming-Chi Kuo of TF International Securities, Apple anticipates shipping around 22 million units of the iPhone 16e in the current year. With the benefits attributed to the C1 5G modem yielding around $10 in savings per unit, this transition to in-house wireless components is projected to lower component costs by an impressive $220 million. This strategic advantage underscores Apple’s determination to facilitate a transition towards in-house manufacturing of wireless parts for future iPhone models, with expectations that a custom Wi-Fi 7 chip may debut alongside the iPhone 17 series later this year.
For further insights, refer to the research published by Counterpoint Research.
Additional information and images can be found here.
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