iPhone 18 to use 2nm A20 chips, raising manufacturing costs

Apple is preparing to use a next-generation 2 nanometer processor, dubbed the A20, in the iPhone 18 lineup next year, but recent industry reports say the chips will cost substantially more to produce, potentially squeezing margins or prompting higher retail prices. Suppliers and semiconductor manufacturers told analysts the new 2 nanometer process will raise per‑unit chip costs by at least 50 percent compared with current 3 nanometer processors, with some estimates placing unit prices for flagship mobile chips near $280 once volume production begins.

The increase is being attributed to unusually large capital expenditure by the chipmaker to develop the 2 nanometer node and to the early stage of production, when yields of functioning chips are still improving. Company representatives have told customers they are not offering the usual discounts while the new node ramps, industry sources said. At the same time, an analyst who tracks Apple supply chains reiterated that TSMC is moving the iPhone 18 family to 2 nanometer silicon, writing, "the 2H26 new iPhones iPhone 18 will be powered by TSMC's 2nm chips," and noting yields recently exceeded 70 percent.