A recent report from Nikkei reveals that Google has successfully created its new flagship phone, the Pixel 9 Pro, at a lower production cost than previous models, even with enhancements in various hardware and software features.
Cost Breakdown of Pixel 9 Pro’s BOM
The estimated Bill of Materials (BOM) for the Pixel 9 Pro is around $406, which is about an 11% decrease from the BOM of the Pixel 8 Pro. This cost reduction mainly results from savings on the display and camera parts, which are often optimized by manufacturers to make premium devices more affordable for customers.
A closer look at the component breakdown shows that key parts like the Tensor G4 processor, the display, and the camera contribute to the BOM. The display, sourced from Samsung, now costs $75, while the camera system is priced at $61. These amounts are significantly lower than those of earlier Pixel versions.
Comparison with iPhone 16 Pro’s BOM
In comparison, Apple reportedly incurs around $568 to produce the iPhone 16 Pro, a device recognized for its high-quality construction and premium pricing. The cost breakdown for Apple’s device includes $110 for the same Samsung M14 display, $91 for advanced camera components, and $135 for the A18 Pro chipset. The higher BOM for the iPhone can be attributed to Apple's choice of pricier components to set apart its high-performance devices in the premium smartphone sector.
While Google’s Pixel devices often outperform Apple’s in terms of image quality, much of this success is credited to software processing. Google emphasizes cost-effective component choices while prioritizing features like AI-driven software enhancements. The company also invests heavily in software development (including AI), which is not reflected in the BOM cost.
Future Implications: Potential BOM Increase for Tensor G5
The costs of processors play a crucial role in the BOM, influencing both performance and energy efficiency. The Pixel 9 Pro’s Tensor G4, priced competitively at $80, may not reach the performance levels of Apple’s $135 A18 Pro chipset or the Snapdragon 8 Elite, which costs nearly $200. This price difference showcases each company’s unique strategies in chipset design and the real-world performance expectations for their flagship products.
Even though the Pixel 9 Pro has a lower BOM, Google's choice to save on materials such as the display and camera does not imply a reduction in quality. The Pixel series is known for its outstanding photography and seamless integration with Google’s AI software, ensuring a competitive user experience without raising prices.
Looking ahead, while the current Tensor G4 remains affordable, there are speculations that Google’s next Tensor G5 processor will be manufactured using TSMC’s 3nm process. This change from Samsung Foundry’s 4nm technology is anticipated to enhance performance and efficiency. However, this shift may also increase production costs due to the higher expenses associated with advanced semiconductor technologies.
If these costs do rise, it could affect pricing for future Pixel devices. Although pricier, the 3nm Tensor G5 might deliver essential optimizations, tackling issues that Pixel users have encountered with past Tensor processors, such as heat management and battery longevity.
