Kuo: Apple is looking to offset cost of new 5G tech in iPhone 12 by using a simpler battery board design that will be 40%-50% cheaper than the one in iPhone 11
Eric Slivka / MacRumors :
Context & Ripple Effects
Kuo's note continues a long run of supply-chain teardowns of Apple's bill of materials — his 2016 spec-and-price breakdown of the 4-inch iPhone set the template for reading Apple's cost structure through component choices. What stands out here is the mechanism: instead of passing 5G radio costs to buyers, Apple reportedly simplifies the battery board by 40%-50% versus the iPhone 11.
That fits an established pattern of Apple internalizing its power and connectivity hardware — designing its own power-management chips in a move that knocked supplier Dialog Semiconductor's shares down sharply (the 2017 Nikkei report), then tapping TSMC for in-house 5G modems to reduce Qualcomm reliance (the 2023 modem plan). Offsetting component costs internally is what keeps pricing options open, which makes the later report that Apple considered raising fall iPhone prices while coupling them to features (the WSJ account) read as the other side of the same ledger.
First-order effects
- Battery-board suppliers lose per-unit revenue as Apple shifts iPhone 12 to a design 40%-50% cheaper than the iPhone 11's, directly clawing back the cost of the new 5G radios.
- Apple protects iPhone 12 margins at launch without a consumer-facing price increase, so 5G adoption lands as an engineering trade-off rather than a sticker-price event.
Second-order effects
- Rival handset makers face the same 5G bill-of-materials squeeze with less in-house design leverage, forcing harder choices between component cuts and retail pricing.
- The savings logic points down the stack: Apple's subsequent move to TSMC-built 5G modems extends the same offset strategy from boards to silicon, eroding Qualcomm's pricing leverage.
Third-order effects
- If each radio generation gets absorbed through redesign and in-house silicon, Apple accumulates durable pricing freedom — consistent with reports it later weighed raising iPhone prices while pairing them with new features and design changes.
- Component suppliers increasingly compete to stay inside Apple's deliberately simplified designs, shifting bargaining power toward whoever controls the system architecture.
The trend: Apple absorbs each connectivity upgrade through component simplification and vertical integration, converting radio-generation costs into margin protection and long-run pricing flexibility.