Apple has invested heavily in the design and manufacture of its own processor technology. When the iPhone shifted to the first versions of Apple Silicon – the A series processors – it relied on 28nm technology. That is, the space between each transistor was 28nm. For reference, a human hair is between 20 and 180 nm. But new processors are more tightly packed, with the gap between transistors a mere 3nm.
TSMC (Taiwan Semiconductor Manufacturing Company Ltd) has been making the silicon wafers Apple needs for its processors for many years. Back when the A7 processor was first released Wirth the iPhone 5S back in 2013, the wafers Apple used cost about USD$5,000 each. But with Apple wanting to maintain small chip sizes it has shifted towards a 3nm processor by packing more transistors on each wafer. And that means the silicon wafers now cost about $18,000 each.
We’ve seen prices for iPhones increase over that time. Inflation, Apple’s investments in renewable materials, new battery, cameras and display technology, increased storage and memory have all contributed to the rise. There’s a neat summary of the iPhone’s price history here.
But the increase in processor cost is significant. And as processors move to increasingly dense architectures, the cost of manufacture will increase.
Unlike many of the other technologies Apple uses like screens, storage and memory, Apple Silicon doesn’t have the benefit of costs being shared with other manufacturers. For example, OLED displays are used in many different devices, so the research, development, tooling and manufacture is smeared quite broadly.
The cost of Apple Silicon is born by Apple alone. Which may go some way to helping us understand what Apple’s premium handsets often cost a little more than the competition.
Anthony is the founder of Australian Apple News. He is a long-time Apple user and former editor of Australian Macworld. He has contributed to many technology magazines and newspapers as well as appearing regularly on radio and occasionally on TV.