Apple's gross margin is highest its been in 9 years

Apple gross margin highest its been in 9 years

Apple's gross margin for Q2 2021 was 42.5%, achieved in large part through a strong iPhone sales mix.

The gross margin has remained at around 38% for years, but strong sales across each product line boosted the profits to a new second quarter high. A combination of several factors affected the gross margin, with popular high-end iPhones being a major contributor.

During the Q2 earnings call, CFO Luca Maestri commented on the gross margin increase and what could have affected it. Strong demand for the iPhone 12 Pro and iPhone 12 Pro Max was a contributing factor.

Apple Gross Margin

"So from March, we were up 270 basis points sequentially really driven by three major factors," said Maestri. "Cost savings which has been good for us during this cycle, a really strong mix on iPhone but in general across all product categories ... and foreign exchange sequentially again from December to March was favorable 90 basis points so that helped as well."

Strong sales across all product categories led to a better gross margin, and Apple expects the high margin to continue into the June quarter. The 24-inch iMac with an M1 processor goes on sale during Q3 and will also attribute to a strong gross margin.

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9 Comments

mac_dog

said about 2 years ago

And by god, this government is doing their damndest to destroy them. So American.

bageljoey

said about 2 years ago

mac_dog said:

And by god, this government is doing their damndest to destroy them. So American.

Hyperbole much?

bala1234

said about 2 years ago

I wonder how much the new M1 chip contributed to it.

prismatics

said about 2 years ago

bala1234 said:

I wonder how much the new M1 chip contributed to it.

I know, right? The Mac pricing is somewhat ridiculous considering the processor must cost less than ~50$ (There is a site where you can, if you are accurate enough and use correct numbers for N7/N7P by TSMC themselves, precisely estimate the cost: https://caly-technologies.com/die-yield-calculator/) a pop at that scale to manufacture. The other parts, including the display, are available at a very low price for the required quality compared to when they were introduced in the required specifications (pixel density etc.)

Just to put in perspective, in the past, Mac pricing ~2012 was more realistic/had much less margin due to novel technologies but it’s the same old technology by now. No breakthrough technological change, just other looks and a cheaper to make chip.