Apple Continues to Promote Low-Cost Phones and Laptops, US Media: Using Memory Price Hikes to Attack Competitors

MacBook Neo

Tech Sina News, Beijing Time March 5 — Apple has recently launched the low-cost iPhone 17e and the budget-friendly MacBook Neo. The Wall Street Journal pointed out that amid rising memory chip prices, Apple aims to leverage its strong supply chain advantages to capture more market share in the low-cost smartphone and laptop markets.

Analysts say that this year, the surge in memory chip prices will severely impact the electronics market. Apple’s pricing strategy for its latest devices indicates that it hopes to use its competitors’ difficulties to increase its global market share.

When Apple announced the new entry-level iPhone 17e on Monday, the starting price was set at $599, the same as last year’s model. The company’s entry-level MacBook Neo, announced on Wednesday, is also priced at $599, below some analyst expectations. Despite rising costs for memory and storage chips potentially eroding Apple’s profit margins, the company continues to maintain a low-price strategy.

More Pain for Competitors

However, these cost increases may be even more painful for Apple’s competitors. Chinese mid-range smartphone manufacturers might be forced to raise prices. Consumers who previously avoided Apple devices due to higher prices and opted for cheaper alternatives will have more reasons to switch to Apple.

“Apple is entering an attack mode. They see the memory crisis as an opportunity to increase market share,” said Francisco Jeronimo, Vice President at IDC. “All other smartphones in the same price range will face price hikes.”

iPhone 17e

He added that this creates opportunities for consumers to switch from Android to iOS, and from Chromebooks and PCs to Macs.

In the Chinese market, Apple may target mid-range Android models from Xiaomi, OPPO, and Honor with its low-cost iPhone 17e. As these models’ prices increase, the gap between them and the iPhone 17e is narrowing, especially with Apple offering 24-month installment plans in China, making the price difference less noticeable.

Following the success of the iPhone 16e in Japan and the US markets, the iPhone 17e is also expected to perform strongly in these countries.

Compared to last year’s models, Apple has doubled the base storage capacity of the iPhone 17e. While this adds value for consumers, it also further compresses Apple’s profit margins.

IDC predicts that due to soaring costs and memory shortages, the global smartphone market will experience its largest decline ever this year, with shipments expected to fall by 13%. The prices of memory and storage chips are rising due to strong demand from AI servers that use these components. Memory helps applications run faster, while storage is used to save photos, videos, and other files on devices.

IDC states that the most affected will be the lowest-priced Android devices, as manufacturing these will become less profitable. PCs and Chromebooks face similar cost pressures, with IDC forecasting an 11% decline in shipments this year.

Apple executives also acknowledge the impact. CEO Tim Cook said during the last earnings call that Apple has seen “significant increases in memory market prices.” He indicated that starting this quarter, Apple’s profits will be more noticeably affected.

Price Increases for High-End Products

To offset the profit margin impact from low-cost entry-level devices, Apple can raise prices on its high-end products, as they did when launching the new MacBook Pro and MacBook Air on Tuesday.

Analysts say that Apple’s strategy of adopting similar approaches in its smartphone lineup could mean some iPhone 18 models expected to be released this fall might see price hikes.

Bergstein Research estimates that the manufacturing cost of the iPhone 18 Pro Max expected to be released this fall could increase by 25%, considering rising costs of memory, storage, and processor chips. Nonetheless, the firm believes Apple will continue to take an aggressive stance.

“Given the unprecedented shortage of memory, Apple has a rare opportunity to take market share from low-end Android manufacturers who cannot secure enough memory,” said Bernstein analyst Mark Newman in a report to clients this week.

As of press time, Apple declined to comment. (Author: Xiao Yu)