The iPhone SE’s $30 price bump looks like a pure 5G tax

For the first time in the history of the SE, Apple has raised the price of the cheapest phone in the line from $399 to $429.

It is almost definitely 5G's fault.

Even for Apple, there are price increases for 5G phones. The price of the standard model of the phone was raised from $699 to $829. Counterpoint Research estimates that 5G added $34 to the bill of materials compared to the 4G-only iPhone 11. According to a report from Fomalhaut Techno Solutions and Nikkei, the most expensive component in Apple's lineup was the 5G modem.

If you didn't buy it from the right, the $30 number is how much you had to pay for a 5G-equipped phone. The price of the non-5G iPhone SE in 2020 will increase to $399, and the price of the non-5G iPhone SE in 2022, will increase to $429, are estimated to be the premium Apple has to pay to put 5G into those phones. It is almost as if Apple is just passing on the cost of building a 5G phone to its customers.

It isn't like Apple has a lot of choices. Everyone knows that Qualcomm is the only real option when it comes to 5G modems.

There is a reason that Apple sued over patent fees for the modems it used in its phones. Apple paid over $4 billion in a settlement a few years later. It became clear that Intel wasn't going to be able to work as a replacement for the 5G modems that Apple needed.

Apple is trying to change that. It paid a cool $1 billion for Intel's 5G modem business and has spent the last several years building its own cellular components, which may start to appear in new iPhones as soon as next year. Unfortunately, those Apple-built modems aren't ready yet, leaving the company stuck with Qualcomm's hardware instead.

There are other reasons why Apple is charging $30 more this year, like the ongoing Semiconductor shortage impacting various components or other economic factors, like rising inflation or supply chain issues, could also be impacting the price beyond just 5G. Apple might have realized that it could just charge $30 more for the SE if it wanted to, because customers didn't seem to mind the $30 price increase for the iPhone 12 and 13

Adding 5G to an iPhone is a significant cost factor for Apple, and the addition of 5G is the single biggest change between the 2020 and 2022 iPhone SE models.

There is a chance that Apple will be able to reduce the cost of 5G components in its future phones if it chooses to move away from the modems that are supplied by Qualcomm. It's possible that a future version of the iPhone SE could return to its original price point of $399.

It's hard to imagine that Apple would bring the price down in the future if it were possible to get customers onboard $429 floor for the phone. You don't become a $3 trillion company by leaving money on the table.