TSMC Reportedly Informs Apple of Higher Chip Fabrication Costs Under 5nm Next Year

Manufacturing the iPhone and other devices could become more expensive for Apple due to the alleged rise in costs. As per a tipster, the Cupertino-based tech giant has been informed by Taiwan Semiconductor Manufacturing Company (TSMC) of the impending rise in advanced fabrication processes of chipsets under 5 nanometre (nm) next year. While the general increase in production costs is said to be between three to five percent over the last 26 years, some customers and assembly lines could see this hike to between eight to 10 percent.

Chips to Get More Expensive

Tipster yeux1122 shared information about the impending increase in manufacturing costs in a post on the South Korean blog Naver. Citing Taiwanese media and business sources, the leaker claimed that TSMC has begun notifying its major clients, including Apple, of the upcoming increase in the advanced fabrication process costs.

It is said to affect chipsets fabricated below the 5nm transistor technology. This potentially means that all of the current iPhone models could become more expensive to manufacture. The latest A19 Pro chip powers Apple's current flagship iPhone 17 Pro and iPhone 17 Pro Max, while the standard variant gets the A19 SoC. Meanwhile, the iPhone 16 models come with the A18 family of chipsets.

The impending price hikes are expected to be in the range of eight to 10 percent, and may be implemented from next year.

Previously, Apple was reported to use the 2nm fabrication process for the unannounced A20 chip for the purported iPhone 18 lineup. While it is anticipated to offer improvements linked to performance and efficiency, it is expected to involve at least 50 percent higher costs than the 3nm process. This is attributed to high establishment costs for the assembly of the new node and low yields in the early phase.

Another report claimed that it costs Apple $45 (roughly Rs. 3,990) to manufacture the A18 chip. The total cost of hardware for an iPhone 17 comes in at around $416 (roughly Rs. 36,900), which is then retailed at $799 (roughly Rs. 71,000). A potential hike in the chip prices could mean a higher bill of materials (BoM) and a decrease in profit margins for the tech giant.