In a research note with TF International Securities, viewed by MacRumors, Kuo said Apple instead aims to offset the cost of 5G by reducing its supply chain expenses, potentially including dropping its upfront non-recurring engineering payment to suppliers of the redesigned metal chassis and frame for 5G iPhones.
Non-recurring engineering refers to the one-time cost to research, design, develop, and test a new product or component. Kuo believes Apple will shift more of this research and development in house.
While the non-recurring engineering payment has typically helped Apple’s suppliers stay afloat when iPhone sales start to slow during the spring and summer each year, Kuo believes it will be less essential in 2020 and beyond since Apple is expected to start releasing iPhones on a biannual basis going forward — lower-end iPhones in the spring and higher-end iPhones in the fall.
Kuo has previously claimed that 5G iPhones will sport a redesigned metal frame with an iPhone 4-like design, suggesting a return to flatter edges. In today’s note, he said both the chassis and frame on 5G iPhones will cost Apple significantly more to manufacture, perhaps pointing towards an even more premium design.
These 5G iPhones will also have eSIM built-in like the former devices.
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