Apple's A20 Chip Could Be Massively More Expensive

Apple's "A20" chip designed for next year's iPhone models could be considerably more expensive, the China Times reports.

a20 chip feature
The A20 chip is likely to be the first widely available 2-nanometer chip, debuting in the iPhone 18 lineup next year and forming the foundation of subsequent M6-series chips. The previous three generation A-series chips have all been based on TMSC's 3-nanometer node, with the upgrade to 2-nanometer promising further performance and efficiency improvements.

TSMC has reportedly told customers, presumably including Apple, to expect pricing that is at least 50% higher than 3-nanometer processors. This is attributed to unusually high capital expenditure for the new node and to the lack of discounting strategies while yields are still in their early acceptable phase.

The report further states that suppliers expect flagship mobile chips built on the 2-nanometer process to carry unit prices around $280 once volume production begins. This would make it the most expensive component in the ‌iPhone‌ and dramatically affect Apple's profit margins, if the increase is not passed on to customers.

A report from DigiTimes last year placed the cost of the A18 chip at around $45, with a total hardware bill of $416 for a model that retailed at $799, implying that the chip represents roughly 10% of bill of materials (BOM) cost and about 5–6% of retail price before logistics and development expenses. The most expensive component in that teardown was the rear camera assembly rather than the chip.

If the component cost rumors are true, Apple could limit 2-nanometer chips to only some 2026 ‌iPhone‌ models, such as the ‌iPhone 18‌ Pro and ‌iPhone 18‌ Pro Max. In September last year, Apple analyst Ming-Chi Kuo warned that "due to cost concerns, not all new ‌iPhone 18‌ models may be equipped with a 2-nanometer processor."

Related Forum: iPhone

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Top Rated Comments

FlavorfulTreat Avatar
9 weeks ago
Would anyone really and truly care if iPhone and new Mac releases went to every two years? This growth strat is just for Apple's stock price and their marketing departments to convince you of "THIS REALLY IS AN UPGRADE"
Score: 15 Votes (Like | Disagree)
jz0309 Avatar
9 weeks ago
Bla bla, Apple has multiyear agreements with all its key suppliers in place, incl TSMC. Will the new process be more expensive, yes. Massively? No
That's just a click bait title...
Score: 12 Votes (Like | Disagree)
agsystems Avatar
9 weeks ago
"dramatically affect Apple's profit margins" - I am taking a wild guess that Apple's profit margin will not be affected
Score: 10 Votes (Like | Disagree)
JPack Avatar
9 weeks ago
You literally see Apple compensating for this by releasing the base iPhone 18 six months later so 18 Pro buyers eat some of the upfront costs related to low yield. The costs for N2 have been forecasted for a long time.

Apple tried a similar strategy with iPhone 14 and 15, but people really didn’t like buying phones with chips a full generation behind. So the new strategy is staggering launches.
Score: 6 Votes (Like | Disagree)
Apple-achian Avatar
9 weeks ago
Segment the product line. 6 Iphones with the upper-tier Pro models having the A20 Pro chip, 2 using the regular, and 2 the cut-down chip. People who want the finest chip in the industry need to pay, no such thing as a free lunch.
Score: 4 Votes (Like | Disagree)
Lounge vibes 05 Avatar
9 weeks ago

Segment the product line. 6 Iphones with the upper-tier Pro models having the A20 Pro chip, 2 using the regular, and 2 the cut-down chip. People who want the finest chip in the industry need to pay, no such thing as a free lunch.
This is… Literally what they already do.
Literally look at any of their product lines.
The base iPad gets the A16, the iPad mini gets the A17, the iPad Air gets the M3 and the iPad Pro the M4.
Even the current iPhones, the lower down the product line you go the worse the GPU is.
Score: 4 Votes (Like | Disagree)