What’s happened? Apple is preparing for a significant leap in smartphone processor technology, but it comes with a dramatic increase in manufacturing costs, potentially making the upcoming iPhone 18 series more expensive than ever.
- Apple’s next-generation A20 chip, expected to feature on the iPhone 18 series in 2026, will likely be the first mass-produced 2nm chip from TSMC.
- According to a report by the China Times, this advanced fabrication technology could increase the chip’s price by at least 50% compared to the A19 chip.
- The rising costs are largely due to TSMC’s massive investment in developing next-gen semiconductor processes and initial yield constraints during early production.
Why is this important? For reference, the A18 chip used in current iPhones costs Apple approximately $45 (via DigiTimes) making up for roughly 10% of the phone’s bill of materials.
- However, according to the report, the A20 chip, fabricated on TSMC’s 2nm process, could cost around $280 each — roughly six times the cost of the A18 that debuted iPhone 16.
- The rise in manufacturing costs would leave Apple with two options: absorb the cost and decrease its profit margins, or pass the cost on to consumers through higher retail prices.
- The development also signals that the current 3nm process has reached its peak potential, and Apple must adopt a more advanced node to achieve meaningful gains in performance and efficiency.
Why should I care? If you’re still using an iPhone 14 or older in 2025 and plan to upgrade next year by going all-in on the iPhone 18 Pro models, you might want to add a few hundred dollars to your budget.
- Apple is rumored to skip the vanilla iPhone 18 and iPhone Air successor at the September 2026 launch event.
- This means that buyers upgrading next year will either have to pay a premium and go for a Pro model or settle for a discounted iPhone 17 series model.
- Moreover, you can expect the top-tier 2026 flagships (iOS or Android), especially the Pro or the Ultra versions that use a 2nm processor, to be more expensive than their current iterations.
OK, what’s next? It appears Apple is on the brink of adopting 2nm chip technology for its highest-end iPhones. However, the steep costs and production challenges may limit its availability to only the Pro models initially.
- The regular iPhone 18 could launch with a 3nm chip or eventually adopt a 2nm chip once production scales and prices stabilize.
- The 2nm A20 chip could also form the basis for Apple’s M6 silicon.
- Meanwhile, Apple is also rumored to skip straight to iPhone 20 in 2027.
