Apple’s upcoming iPhone 18 Pro could see a price increase when it launches next year, and the reason appears to lie deep inside the phone’s chipset. Reports from China Times suggest that TSMC’s new 2nm processor, which is expected to power the iPhone 18 series, comes with a production cost nearly 50% higher than its predecessor.
The high cost of cutting-edge chips
Apple has long relied on Taiwan Semiconductor Manufacturing Company (TSMC) for its silicon, and the transition to the 2-nanometre (2nm) process represents a major leap in chip technology. However, this technological advancement has come at a steep price. TSMC’s capital expenditure for developing the 2nm process has reportedly been enormous, with yields, the proportion of usable chips per batch, only recently reaching acceptable levels.
Despite Apple’s significant buying power, the report claims that the tech giant isn’t receiving any special discount from TSMC. As a result, the production cost per chip is set to be at least half again as much as the previous generation.
Rising material costs may add pressure
Alongside the processor’s high cost, the overall bill of materials (BoM) for smartphones is also increasing. The China Times report mentions that prices for components such as storage modules and camera assemblies are on the rise. While the processor is one of the costlier parts of the iPhone, it’s not the most expensive.
According to Digitimes, the A18 processor used in the iPhone 16 series cost Apple about $45 out of a total estimated $416 in manufacturing costs, roughly 10% of the device’s total build cost. The most expensive component, however, remains the rear camera assembly, which has grown increasingly complex and costly with each new iPhone generation.
Which iPhone models could be affected
Early reports suggested that Apple would restrict the 2nm processor to the iPhone 18 Pro models to offset costs. However, analyst Ming-Chi Kuo stated in March 2025 that the entire iPhone 18 lineup, including the base and Plus models, would adopt the new chip, as TSMC’s yields have now surpassed 70%.
Even so, given the steep cost of 2nm production, Apple may be forced to raise launch prices, at least for the Pro models. If true, this would mark the first significant price hike for Apple’s flagship iPhones in several years, reflecting the growing expense of pushing hardware innovation forward.
