Apple Inc. has increased the prices of its latest iPhone and iPad models globally while keeping trade-in values for older devices unchanged [1, 2].
This pricing shift places a higher financial burden on consumers attempting to upgrade their hardware. By increasing the retail cost of new devices without raising the credit given for old ones, the company effectively widens the gap in the total cost of ownership for its user base [2].
CEO Tim Cook attributed the price increases to external market pressures. Cook said that price hikes for the company’s popular products, including iPhones and iPads, are “unavoidable” due to the skyrocketing cost of memory caused by the AI boom [1].
The surge in demand for high-performance memory chips, a critical component for running generative AI models locally on devices, has driven up procurement costs for hardware manufacturers [1]. Apple has passed these increased costs directly to the consumer across all markets, including India [1].
Despite these rising costs, the company has not adjusted its trade-in program to reflect the new pricing tier [2]. This means customers will receive the same credit for their previous-generation iPhones as they did before the price hikes, despite the higher cost of the replacement device [2].
Apple has not provided a specific timeline for when these costs might stabilize or if trade-in values will be reviewed in the future [1, 2].
“Price hikes for the company’s popular products... are “unavoidable” due to the skyrocketing cost of memory caused by the AI boom.”
This move signals that the 'AI tax' is moving from the cloud to the hardware level. As AI features require more expensive memory and processing power, Apple is testing the price elasticity of its loyal customer base. By maintaining stagnant trade-in values, the company is protecting its margins against the rising cost of components, shifting the economic impact of the AI boom entirely onto the consumer.
