iPhones and Android Smartphones Will Get More and More Expensive, Here’s Why

The steady progress towards smaller, more advanced chip technologies inevitably increases production costs, posing a potential threat to the affordability of future smartphones.

In fact, analysts at International Business Strategies (IBS) predicted a significant increase in chip costs with the emergence of 2nm process technology. A 50% increase compared to 3nm processors is estimated. This increase should lead to: a staggering price of $30,000 for each 2nm chipChips etched at 3 nm cost only around $20,000 per wafer.

Smartphone chips will become increasingly expensive

According to IBS, the cost of building a 2nm chip manufacturing facility with a monthly capacity of approximately 50,000 wafers is estimated at $28 billion; This is a significant increase from the $20 billion required for a 3nm chip manufacturing facility with similar production capacity. Rising costs are driven by the growing need for advanced tools for wafer fabrication, particularly extreme ultraviolet (EUV) lithography required for making 2nm chips.

The impact of these rising costs is expected to be reflected in companies using advanced manufacturing technologies, including smartphone manufacturers. These are expected to experience the knock-on effect of increasing manufacturing costs per silicon wafer and chip, and They will then have to reflect these increases in the price of their smartphones.

We know that Apple was supposed to be one of the first to use this new 2nm engraving and therefore one of the first to be affected by these changes. IBS estimates the per-chip cost for a 2nm “Apple chip” will be $85, compared to around $50 today. Therefore, iPhones are likely to experience further price increases in the coming years. As a reminder, we expect the first chips etched at 2nm to arrive in 2025, perhaps even 2026.