Apple is reportedly facing its steepest year-on-year chip cost increase as it prepares to transition its iPhone processor to a 2-nanometre manufacturing process. According to supply-chain estimates, the upcoming A20 chip could cost around $280 per unit, roughly 80 percent more than the previous generation.
Earlier projections had pointed to a smaller rise, but expectations have climbed as the realities of early 2-nanometre production have become clearer. Apple is expected to rely on TSMC for the A20, making it one of the first major customers to move volume iPhone silicon onto the new node.
Apple has long been willing to absorb higher early costs to secure access to leading-edge manufacturing. Past transitions to 5-nanometre and 3-nanometre processes delivered meaningful gains in performance and power efficiency without price increases of this scale. The jump to 2-nanometre, however, appears to be more disruptive.
Several pressures are converging at once. First-generation nanosheet yields remain fragile, pushing up the cost of usable chips. Advanced packaging techniques required for modern system-on-chips add further expense. At the same time, rising memory prices are inflating the overall cost of iPhone components. Together, these factors make the A20 transition significantly more expensive than previous node shifts.
At the technical level, 2-nanometre introduces gate-all-around transistor designs, also known as nanosheets. Unlike older designs, these transistors wrap the gate fully around the silicon channel, allowing tighter control of electrical flow. The result is better power efficiency and higher transistor density, but the process is harder to manufacture reliably at scale.
For iPhone users, the benefits are likely to show up in sustained performance and battery life rather than headline benchmark numbers. As Apple pushes more on-device AI tasks, from photography processing to system intelligence and local inference, raw silicon capability becomes increasingly important. Efficiency gains at the transistor level help support those workloads without compromising battery life.
TSMC leads, but competition still shapes the market
TSMC is widely regarded as the most reliable option for early 2-nanometre production, which explains why Apple, Qualcomm and MediaTek are all tied to its initial capacity. Apple is believed to command a substantial share of that early output, though exact allocations remain unclear and typically shift as yields improve.
Samsung, meanwhile, is developing its own 2-nanometre gate-all-around process for future Exynos chips, including the Exynos 2600. While Samsung’s foundry business has struggled with consistency in recent years, its efforts still matter. Even for Apple, credible competition puts pressure on pricing and timelines at TSMC.
The unanswered question is where these rising costs ultimately land. Apple has historically shielded consumers from early manufacturing expense, but an increase of this magnitude raises the possibility that some of the cost could eventually surface in iPhone pricing as 2-nanometre production matures.
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