Apple is set to continue its collaboration with TSMC for the next generation of its smartphone processors, but recent rumors surrounding TSMC's 2nm chip production have cast potential challenges on the horizon. The semiconductor giant's advanced manufacturing process, paired with Apple's strategy to reserve significant production capacity, is stirring concerns about chip shortages and escalating costs that could impact the smartphone market.
Next-Generation iPhones to Feature 2nm Processors
The upcoming iPhone 18 series, expected to launch next year, will be the first Apple devices to incorporate application processors (APs) built on TSMC's first-generation 2nm process node. This marks a leap from the current 3nm A19 processors used in the iPhone 17 lineup. Apple has reportedly secured half of TSMC’s 2nm production capacity to maintain its competitive edge by limiting rivals such as Qualcomm and MediaTek from accessing the same advanced technology.
Concerns Over Production Capacity and Yield
Despite Apple's control over a large portion of TSMC’s 2nm output, there are industry concerns that TSMC may struggle to meet the high demand for these cutting-edge chips. Production complexities, especially with the introduction of Gate-All-Around (GAA) transistor technology—TSMC’s next step in transistor design—might lead to yield challenges that could affect supply volume.
Apple’s Commitment to TSMC Over Samsung Foundry
Though Samsung Foundry also offers a 2nm process featuring GAA transistors and has demonstrated technological advantages, Apple has no plans to switch from TSMC. This decision is largely influenced by Samsung’s past issues with chip yields, which led to Samsung replacing its decacore Exynos 2500 processors with the Snapdragon 8 Elite in some Galaxy S25 models earlier this year. Apple values consistency and reliability, which it currently trusts TSMC to provide.
Beyond iPhone processors, Apple relies heavily on TSMC for various silicon components, including M-series chips for Macs, the S-series chips for Apple Watch, C-series modem chips, and Wi-Fi chips, many of which are now produced at TSMC’s Arizona facility.
Skyrocketing Silicon Wafer Costs Signal Price Increases
With each refinement in semiconductor manufacturing technology, the cost of silicon wafers has surged dramatically. While 10nm wafers cost around $6,000 each back in 2016, the expense for 2nm wafers this year has inflated to approximately $30,000 per wafer. This cost is expected to climb to $45,000 for the anticipated 1.4nm process in 2027, which inevitably will trickle down to higher prices for flagship smartphones.
Samsung's Edge with Early 2nm Adoption
Although Apple’s next 2nm processors will debut in the iPhone 18 series next year, Samsung will beat them to market with its Galaxy S26 and S26+ models launching in February. These phones will feature Samsung's Exynos 2600 processors built on Samsung Foundry’s 2nm GAA process, initially available in select regions like South Korea, Europe, and parts of Asia.
As the semiconductor race intensifies, Apple’s dedication to TSMC illustrates its preference for reliability and proven manufacturing capabilities amid evolving technological and market challenges.
