Apple (AAPL.US) partners with Klarna (KLAR.US) to launch the “Apple Upgrade” leasing plan, aiming to boost hardware sales through a subscription model

According to ZhitongFinance APP, faced with rising costs and demand pressures, Apple (AAPL.US) is preparing to make major changes to its sales model. According to sources, Apple plans to officially launch a device leasing service called "Apple Upgrade" in the United States on July 28 local time, partnering with Swedish fintech company Klarna (KLAR.US) as its financial supporter. The aim is to attract users and stimulate sales with lower monthly payment thresholds.

This new service will first launch in Apple's physical retail stores and online channels in the US, covering most iPhone, Mac, iPad, and Apple Watch models.

By design, Apple Upgrade operates more like a hardware subscription: users, once approved through a soft credit check, can choose to pay off the device balance early, upgrade early to a new device during the lease period, or keep the device after the term ends (in certain situations, additional fees may apply). Alternatively, similar to a car lease, users can return the device directly at the end of the term. The lease term for iPhone and Apple Watch is 24 months, while Mac and iPad are 36 months.

Apple plans to market Apple Upgrade as an option with lower monthly payments than current installment plans. To this end, the company will halt new registrations for the "iPhone Upgrade Program" and standard installment plans, focusing entirely on supporting the new plan.

Unlike the existing iPhone Upgrade Program, Apple Upgrade does not bundle AppleCare services, and devices such as Apple Watch SE, entry-level iPad, iPhone 16, and MacBook Neo are not eligible. Business and educational purchases are also excluded.

The major backdrop for Apple launching this leasing service is the significant rise in hardware costs. Due to the boom in artificial intelligence (AI) data center construction driving up demand for storage chips, Apple recently raised prices by several hundred dollars for products such as Mac and iPad, and it is widely expected the company will increase the price of the new generation iPhone to be released in September.

By introducing a more flexible leasing model, Apple is attempting to offset the dampening effect of price increases on consumer demand. In fact, Apple previously planned to launch its own hardware subscription service but cancelled that plan in 2024. This time, by leveraging Klarna to provide financial services, Apple can pilot a subscription-based sales model without directly bearing financial risk.

After the news broke, Klarna's US shares surged as much as 11% to $20.78 intraday on Tuesday, while Apple's stock price remained largely unchanged. As of press time, both Apple and Klarna have yet to respond to requests for comment.