iPhone 18 Series May Cost More Due To Costlier A20 Chip: Report

Apple is reportedly planning to introduce many surprises with its next smartphone, the iPhone 18 series. A new report suggests that the upcoming models could be priced higher than anticipated due to an unexpected rise in the cost of the models' processors.

The new A20 SoC chip is likely to make the iPhone 18 series notably more expensive than the iPhone 17 series, according to a report by China Times.

The report said that the 2nm A20 chip for the iPhone 18 series will cost more than its predecessor. Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), Apple's chip-making partner, has reportedly told the US tech giant that the prices could be 50% higher or more for the new chips.

The A19 processor in the iPhone 17 series used TSMC's 3nm N3P process. The shift to 2nm technology promises major performance improvements, but it also comes with significant price increases that may affect the cost of the iPhone 18 series, pushing the price of the phones above the current generation.

“It has been reported in the industry that TSMC's capital expenditure for advanced processes is huge, but the yield rate has already reached the target. Therefore, there is no discount or negotiation strategy for the time being. Compared with the 3-nanometer process, the price increase is at least 50%,” the report, originally published in Chinese in September, said.

Apple's total bill of materials (BOM) for the iPhone 16 (256GB) stood at $416, with the A18 chip accounting for $45 of the cost, an earlier report in DigiTimes said. The phone was launched at a retail price of $799, including Apple's profit margin.

If the A20 chip's price rises by 50% as reported, Apple is likely to pass the additional cost to customers to protect its profit margins. Otherwise, it could lead to cuts elsewhere. This potential increase suggests that the iPhone 18 series could be priced higher than the iPhone 17 series.

Apple is also planning changes to its iPhone launch cycle. Not all three models are expected to launch together next year. The base iPhone 18 is likely to be delayed until 2027, according to media reports.