“All indications point to the fact that Apple is trying to roll out one of the most innovative phones during the next cycle, which would be the 10th anniversary of iPhone. This would inevitably lead to a massive spike in bill of materials (BOM) for Apple,” Rohit Chhatwal writes for Seeking Alpha. “According to IHS, the recently launched Samsung Galaxy S8 also saw an increase in BOM from $264.16 for Galaxy S7 to $307.50. However, it is doubtful if Apple will be able to push the envelope when it comes to selling price.”

“There is hardly any doubt that Apple’s management will be pulling out all stops for the next iPhone. Many Wall Street analysts have already increased their estimates for current year sales, believing that the iPhone 8 will deliver substantial sales,” Chhatwal writes. “To deliver blockbuster sales, Apple would need to show more than incremental improvements.”

“After speaking with manufacturers, recent estimates by UBS show a substantial increase in component cost across the board for the new iPhone,” Chhatwal writes. “Last year, iPhone 7 had a BOM of $224.80, which is $36.89 higher than iPhone 6S. The final BOM of the iPhone 8 can very well end up in the range of $325 to $350. This would be a hefty bump in cost for Apple, and it would need to increase its average selling price, ASP, in order to maintain its margins… In the end, Apple might have to settle between lower sales or lower margins. Either of these alternatives would dampen the market sentiment and reduce the probability of a bull run on the stock.”

Read more in the full article here.

MacDailyNews Take: This is Apple we’re talking about here, not Oppo.

Apple will post higher YOY sales while maintaining strong margins (that will improve over time).

Apple sells premium products to premium customers at premium prices. They will sell as many iPhone 8 units as they can assemble, box, and ship.