Emir BardakçıAccording to recent news in the tech industry, the world’s leading chipsets developer, TSMC, is going to substantially hike the price of its advanced chipsets, with the price rising between 3% to 10% for sub-5nm chipsets, starting from the year 2026. Although the recent news is about the cost hike pressure on the upcoming Apple iPhone 18, the news has massive implications for the entire smartphone market, including the upcoming Xiaomi 17 Ultra.
The Fundamental Factor for the Cost Rise
“The main reason for the price revision is the extremely high complexity of investment in the 2nm process,” according to reports. The technology, which is the next-generation process, brings with it the novelty of the “Gate All-Around” or GAA type transistor design, according to reports. Although the technology is believed to provide superior processing capabilities, the equipment necessary for its production is highly complex, leading to drastically higher production costs, according to reports.
According to industry analysts, the fact that 2nm technology is in the early stages of development translates to lower yields, which are generally the case with technology still in the early stages of development. Moreover, the cost of production of the 2nm technology is estimated to be over 50% higher compared to the current cost of production of the 3nm technology.
Effect on Apple and the General Market
They are reported to manufacture around 70% of the world’s cutting-edge semiconductors, hence having strong pricing power. Rivals such as Samsung and Intel are investing, but they are less likely to contest the leading market share held by TSMC in the short run. The effect will also be realized by Apple, one of their main customers, who will, in the meantime, adopt their cost-saving techniques.
Apple is also predicted to bring its 2nm A20 processor only in the iPhone 18 Pro, while the common iPhone 18, along with the release of the new “iPhone Air,” will be left with the 3nm A19 processor. Such differentiation will lead to the enhancement of the processing capabilities of the higher-end models of the device, along with the spreading of the cost over time.
What This Means for Xiaomi & Snapdragon
However, the reason for the price escalation is just the tip of the iceberg for the technology giant, Apple. The reason is that the chipmaker, TSMC, is also the silicon foundry for other prominent chip manufacturers, including the leading Qualcomm, which makes the popular Snapdragon mobile processors for the highest models of the Chinese firm, Xiaomi. The price impact will be seen in the production of future versions of the Qualcomm Snapdragon 8 Elite line, which is the successor to the current flagships with the same name.
With the miniaturization of chips almost reaching their limit, the price of each step of innovation is rising exponentially. What this means is that for Xiaomi, which uses the most advanced versions of the Snapdragon line of SoCs, the entry price for its most crucial components is about to go up. Although the company has one of the most advanced supply chain management techniques, even an increment of 3%-10% in the price of chips may push the price of its most advanced smartphones in the entire Android bracket to the higher side.
