Apple’s iPhone 17 price hike likely says Jefferies; expects strong Q4 results

Jefferies said a price hike for Apple’s (NASDAQ:AAPL) iPhone 17 is likely, but not enough of a positive to re-rate the stock.

Analysts led by Edison Lee expect a $50 increase in the selling price for iPhone 17 Slim/Pro/Pro Max (no change for 17 base), which represents a 4% to 5% hike from last year.

The analysts said their latest supply chain checks indicate that — all four iPhone 17 models will be equipped with 12GB DRAM, up from 8GB in iPhone 16, and DDR5 prices have risen by 10% to 15% year-over-year; the 17 base/Slim model will adopt a steel case to wrap the batttery (to achieve higher battery density), and new heat dissipation solutions; and A19 Pro chip for Pro/Pro Max, N3P process node at Taiwan Semiconductor Manufacturing (TSM).

Lee and his team believe that the average Bill of Materials, or BOM, cost for iPhone 17 will rise by $20 to $25. Moreover, there will be a tariff impact even before finalizing reciprocal tariffs for China and India.

The analysts added that assuming 40% of the iPhone 17 series to be sold in the U.S. will be made in China, the tariff at the current rate will add 8% to the cost. Even if we assume Apple will implement a global price increase to offset that, that will mean a 2.5% increase or nearly $25, according to the analysts.

Thus, a $50 price increase (excluding the base model) may barely cover the above cost increases, the analysts noted.

Thoughts on Apple’s upcoming fiscal fourth quarter results

Lee and his team still expect strong June quarter results of Apple due to strong iPhone demand, with new evidence from U.S. telcom companies.

The analysts said that last week, the three major U.S. telcom companies reported combined equipment sales growth of about 22% year-over-year, a big acceleration from 6% in the first quarter of 2025 and a new high in the past six quarters.

“Telcos did attribute the strength to tariff-driven pull-in demand from consumers. We believe such strength would benefit AAPL, Samsung and Motorola the most, as these brands accounted for 91% of US smartphones sales in 2024,” said the analysts.

The analysts noted that they previously highlighted that Counterpoint’s and IDC’s second quarter 2025 iPhone shipment growth figures are lower than Jefferies’ estimates of 8%.

Apple is slated to report its fiscal fourth quarter results on Thursday.

India-made iPhones

The analysts said that their supply chain checks suggest that Apple intends to produce 18% of the iPhone 17 in India (for all four models) in the second half of 2025, rising to 25% in the first half of 2026 and 30% to 35% in the second half of 2026. The plan is to produce a portion of every model of iPhone in India, including even the foldable model in 2026.

Longer term, the target is to produce 40% of iPhones in India, so that it will cover both U.S. and India demand. The remaining 60% will still be produced in China, to meet demand outside the U.S. and India, the analysts added.

According to research firm Canalys, the total volume of “Made-in-India” smartphones grew 240% year-on-year and now accounts for 44% of smartphones imported into the U.S., up from only 13% of smartphone shipments in the second quarter of 2024.

Lee and his team said, currently, the yield rate in China is 99% but in India, it ranges from 94% to 97%. This means the cost of assembling an iPhone in India will be 2% to 5% higher than in China. But besides that, there will be logistics costs (most components and modules are shipped from China to India), and productivity in India is likely lower.

The analysts estimate that the tariff differential between China and the U.S. would have to be at least 10 percentage points to justify the move to India. But supply chain security and India’s localization requirement may prompt Apple to move, even if financially it does not justify the move.