The iPhone 18 is poised to see one of the biggest changes in recent years. The focus isn't on the design or individual features, but rather on the new A20 chip. Internal supply chain reports reveal that Apple is facing significantly higher costs for the processor than ever before. The switch to 2-nanometer manufacturing brings technological advantages, but also represents a major economic shift.
Apple has consistently improved its iPhone chips annually for years, usually with moderate performance and efficiency gains. With the iPhone 18, the company is partially deviating from this pattern. The A20 is expected to be manufactured using a 2-nanometer process and could cost Apple up to $280 per unit. This represents roughly 80 percent more than the A19 and is significantly higher than previous estimates. This makes the processor itself one of the most important factors in assessing the iPhone 18.
The A20 chip and the sharply increased costs
According to recent supply chain reports, the A20 chip costs Apple roughly twice as much as previous generations. This is primarily due to the switch to 2-nanometer production. The chip is to be manufactured by TSMC, Apple's long-standing partner for state-of-the-art manufacturing technologies.
While earlier transitions to 5 nanometers and later to 3 nanometers were also expensive, they remained within a manageable range. The cost increase is significantly greater with the move to 2 nanometers. Previous forecasts predicted lower additional costs, but these have since been revised upwards, as manufacturing is proving more complex than initially assumed.
Why 2 nanometers are so expensive
Several factors are driving costs up simultaneously. One of the most significant is the low yield in the early stages of 2-nanometer production. The new generation of transistors, known as nanosheets, is more difficult to manufacture reliably in large quantities. Added to this are stricter production requirements and greater technical complexity in chip packaging.
Rising memory prices also play a role. Each of these factors increases costs on its own, and together they reinforce each other. This combination is precisely what makes the current node upgrade more expensive than any previous manufacturing changeover at Apple.
Gate-All-Around as a technological basis
The 2-nanometer node brings about a fundamental change in transistor architecture. Instead of classic FinFETs, gate-all-around transistors are used. In this design, the gate completely surrounds the silicon channel. This allows for more precise control of the current flow, reduces energy losses, and improves efficiency.
For the iPhone 18, this translates to more stable performance over longer periods and improved energy efficiency. This is becoming increasingly important, especially with the growing demands of AI features on the device itself. Computationally intensive tasks like photography, system intelligence, and local AI inference benefit more from actual silicon performance than from pure software optimization.
Impact on the iPhone 18 in everyday life
In practical use, the advantages of the A20 are particularly evident under sustained load and battery life. The iPhone 18 is designed to perform demanding tasks at high performance for longer periods without consuming an excessive amount of energy. Given Apple's growing focus on AI capabilities directly on the device, the processor is becoming a central component of the entire platform.
At the same time, it remains to be seen how the sharply increased costs will affect the company in the long term. In the past, Apple has often accepted higher initial costs in order to gain early access to new manufacturing technologies and secure a competitive advantage.
TSMC as a key partner and the pressure from Samsung
TSMC is currently considered the most likely option for early mass production of 2-nanometer chips. In addition to Apple, Qualcomm and MediaTek have also secured capacity at TSMC. It is assumed that Apple will occupy a significant portion of this early production, although specific figures have not been confirmed.
In parallel, Samsung is working on its own 2-nanometer GAA process with the Exynos 2600. Samsung's foundry division has recently struggled with consistency issues, but competitive pressure remains high. For Apple, this competition is advantageous in the long run, as it creates alternatives and can limit price pressure on TSMC.
Price question and outlook
It remains unclear whether the higher costs of the A20 chip will be absorbed entirely by Apple or later reflected in the price of the iPhone 18. Previous generations have shown that Apple is willing to accept higher expenses in the short term to secure its technological leadership. However, given the scale of the current cost increase, it cannot be ruled out that the new manufacturing process will ultimately affect final prices.
A20 and 2 nanometers as a turning point for the iPhone 18
The iPhone 18 is emblematic of the increasing effort involved in modern chip development. The A20, manufactured using a 2-nanometer process, promises noticeable improvements in performance and efficiency, but is also the most expensive iPhone processor to date. Whether this move will remain primarily a strategic advantage for Apple or will also have economic consequences for the product will only become clear once 2-nanometer production has matured. What is clear, however, is that the A20 is more than just a typical annual upgrade and elevates the iPhone 18 to a new level of technological sophistication. (Image: Shutterstock / IM Imagery)
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