Make no mistake about it. When it comes to smartphone application processors, 2026 is the year of the 2nm process node. If there are no surprises, in certain regions the Samsung Galaxy S26 and Galaxy S26+ will be the first smartphones powered by a 2nm application processor (AP). In Europe, South Korea, most of Asia, Africa, and the Middle East, those two models will be equipped with the Samsung designed and built Exynos 2600, which will be manufactured using Samsung Foundry's 2nm GAA process node.
Why a chip's transistor density is so important
In other areas, like the U.S., China, Canada, and Japan, the Galaxy S26 and Galaxy S26+ will have the Qualcomm Snapdragon 8 Elite Gen 5 AP under the hood. That chipset will be built by TSMC using its 3nm process node. You wonder why this is so important. As the process node number gets smaller, the features of the chip shrink as well, including the transistors. Smaller transistors mean that more can fit into a square millimeter which defines a chip's transistor density.
Apple might pay as much as $280 for each A20 Pro chipset. Image credit-Consomac
Chips with a higher transistor density are usually more powerful and energy efficient. This is because having more transistors packed inside means that a chip can process more data at the same time. Transistors packed tightly together like sardines also are more energy efficient because the electrical signals don't have far to go, which reduces "heat waste."
As for the iPhone, this September we expect to see Apple release the iPhone 18 Pro, iPhone18 Pro Max, iPhone Air 2, and the iPhone Fold. These models will be powered by the A20 or A20 Pro APs built by TSMC using its 2nm (N2) process node. TSMC's 2nm production will catch up to Samsung Foundry which started using Gate-All-Around (GAA) transistors with its 3nm chips. Unlike the previous FinFET transistors, GAA transistors use vertically stacked horizontal nanosheets to prevent current leaks and increase the amount of electricity that flows through a transistor that is turned on.
Apple is reportedly paying 6 times more for the A20 Pro AP than what it paid for the A18 Pro AP
TSMC is raising the price on the silicon wafers that are used as the foundation or substrate that materials are printed on or layered over. A 2nm chipset could consist of as many as 100 individual layers. A 12-inch wafer used by TSMC in the production of 2nm chips costs $30,000 compared to $20,000 for the similarly sized wafer used to build 3nm chips. Apple will be forced to either eat the additional cost reducing its profit margins or hike the prices of the new iPhone models it releases this coming September.
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Will Apple eat the higher chip costs or raise iPhone prices?
Apple will hike iPhone prices.
33.33%
Apple will lower profit margins and eat the higher costs.
16.67%
A little of both.
50%
One report says that Apple will end up paying $280 for each A20 Pro chipset. This is 87% higher than the $150 per chipset price Apple supposedly paid for last year's A19 Pro AP used to power the iPhone 17 Pro series and the iPhone Air. That component was built using TSMC's third-generation 3nm process (N3P). The A18 Pro employed by the iPhone 16 Pro and iPhone 16 Pro Max was produced using TSMC's second-generation 3nm process node (N3E) and cost Apple approximately $45-$50 per chip set. If legit, these figures show that since 2024, the cost to Apple for the APs used on the premium iPhone models has risen more than six times (from $45 to $280)
TSMC has a huge market share with Samsung Foundry a distant second
To be sure, Samsung and Google will also have to deal with the higher wafer costs for the Exynos 2600 and the Tensor G6, both of which will be manufactured using the 2nm process by Samsung Foundry and TSMC respectively. Yield issues over the last few years have resulted in Samsung Foundry having a 7.2% market share compared to 71% for TSMC. A smartphone's application processor is a critical part and TSMC is considered a more reliable source than Samsung Foundry which is why companies like Apple, Qualcomm, and MediaTek are paying the higher wafer prices to have TSMC build their chips.
Samsung Foundry is reportedly charging $20,000 for the 12-inch silicon wafers used for its 2nm GAA production. That is 33% less than TSMC's wafer price. On the other hand, TSMC's 2nm yield is believed to be around 70% compared to 50-60% for Samsung Foundry.
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Alan, an ardent smartphone enthusiast and a veteran writer at PhoneArena since 2009, has witnessed and chronicled the transformative years of mobile technology. Owning iconic phones from the original iPhone to the iPhone 15 Pro Max, he has seen smartphones evolve into a global phenomenon. Beyond smartphones, Alan has covered the emergence of tablets, smartwatches, and smart speakers.
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