Apple shaves cost from displays in newest iPhones: analyst firm

By Stephen Nellis

(Reuters) - Apple Inc shaved some parts from the display in its largest new iPhone, helping keep costs under control in what has become the priciest component of its phones in recent years, according to a new cost analysis of the device.

TechInsights, an Ottawa, Ontario-based firm which rips open phones to analyse their contents and estimate the cost of the parts inside, said on Tuesday that the iPhone Xs Max with 256 gigabytes of storage capacity contains about $443 in parts and assembly costs, compared with $395.44 for the 64-gigabyte version of last year's iPhone X.

Apple released a trio of new phones earlier this month, including an update on last year's iPhone X, called the iPhone Xs, that starts at $999, and the budget-minded iPhone Xr that starts at $749. But it was the iPhone Xs Max - with a 6.5-inch display that uses so-called OLED technology for richer colours - that pushed new pricing boundaries, starting at $1,099.

In its cost analysis released on Tuesday, TechInsights found that the single priciest part in the iPhone Xs Max - the display - cost $80.50, compared with $77.27 for last year's iPhone X, which featured a smaller 5.8-inch screen.

The relatively small increase in cost despite the larger screen size was because Apple appeared to have removed some components related to its so-called 3D Touch system, which makes apps respond differently depending on how hard users press the screen.

"All told, what they took out adds up to about $10, so this $80 estimate would have been about $90," Al Cowsky, who oversees cost analysis at TechInsights, told Reuters in an interview. "They had a trade-off in cost."

Apple declined to comment on the study.

But Bob O'Donnell of TECHnalysis Research said Apple likely made the right decision to focus on ensuring it could deliver a larger-screened model this year economically.

"For a certain group of people, the whole thing is about the screen. It's driving the whole experience and it's what is making people excited about using the phone," O'Donnell said.

Other costs that increased were the phone's processor and modem chips, primarily because the chips used newer chip-making techniques from Intel Corp and Taiwan Semiconductor Manufacturing Co Ltd to boost their performance while taking up the same space. The 256-gigabyte iPhone Xs Max TechInsights analysed sells for $1,249 in the United States.

(Reporting by Stephen Nellis; Editing by Leslie Adler and Lisa Shumaker)