Apple A20 Chip Price Could Skyrocket 50 Percent
The upcoming Apple A20 chip might carry a substantially higher price tag. This powerful new processor is designed for the next generation iPhone models. Therefore, industry observers are now raising serious concerns. The China Times reports this massive price increase. The A20 chip is likely the first widely available 2-nanometer chip. It is expected to debut in the iPhone 18 lineup next year. The chip will also form the basis of the future M6-series chips. Previous A-series chips have relied on TSMC’s 3-nanometer node. The move to 2-nanometer promises both improved performance and greater efficiency.
Massive Cost Jump Threatens Margins
TSMC, Apple’s manufacturing partner, has informed its clients of new pricing. Specifically, they should expect costs at least 50 percent higher than 3-nanometer processors. This is a very significant jump in component expense. This cost is due to unusually high capital expenditure. Furthermore, there is a current lack of discounting strategies. This is normal while yields remain in their early acceptable phase.
The report suggests that flagship mobile chips built on this 2-nanometer process will be very expensive. Suppliers anticipate unit prices around $280 once volume production starts. Consequently, the chip would become the single most expensive component in the iPhone. This high cost could dramatically affect Apple’s overall profit margins. This impact will occur if the substantial increase is not passed to the consumer.
Potential Price Hikes
Historically, hardware costs for an iPhone retail model were smaller. A previous analysis placed the A18 chip cost around $45. The total hardware bill for a $799 model was only $416. This meant the chip was just about 10 percent of the Bill of Materials cost. Before this, the rear camera assembly was the most expensive part. However, a price of $280 for the A20 represents a massive change. This change may force Apple to raise prices for consumers. Such a price increase would certainly be felt across markets in Southeast Asia.
Industry analyst Ming-Chi Kuo previously issued a warning. He advised that not all new iPhone 18 models may include the 2-nanometer processor. This caution was specifically due to high cost concerns. Therefore, Apple might limit the new chip to only premium models. For example, it could be restricted to the iPhone 18 Pro and iPhone 18 Pro Max versions. This segmentation strategy would help to offset the staggering cost increase. This also means standard iPhone buyers may miss out on the full performance upgrade.
Origin: Macrumors
