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Why premium smartphones are so expensive?
  • Following is result of small talks with industry insiders.

    All of the leaders of smartphones market like Apple, Samsung, Huawei are rising prices for their top offerings. For some models profits already broke 400% barrier (do not look at fake cost to production lists as they have no meaning). But it is only few models and such profit margins become real only after certain volume.

    Reason of such price hike is not new screens or even not extra cameras - main reason is that buyers of such smartphones finance a lot of semiconductors industry expenses. From newest processes around 70% is paid for by top and middle lines smartphone buyers and remaining 30% mostly financed by datacenters and high performance computing centers.

    Biggest danger now is smartphones market saturation, inability to hike prices even more and issues in semiconductors industry where progress costs rise exponentially still.

    Insiders tell that we can expect dramatic events unwind in 2019 already and certainly in 2020 and 2021. Whole industry will be shaken and it is not much they can do as we have mostly monopolies with not much mergers potential.

    Thing happening at NAND and especially DRAM market can be required moves for redistribution of profits.

    Main goal remains to keep two companies to be able to reach real 7nm. Despite for now no one of them can do even real 10nm (marketed TSMC 7nm is worse than Intel 10nm).

    Main candidate for next big fall now is Samsung who is most affected by smartphones financing of their own semiconductor division.

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  • Interesting opinion. Never thought about it.