Bad news for smartphone owners, it seems that mobile devices will continue to see their prices increase over the coming years, in particular because of the chips they use.
The steady progression toward smaller, more advanced chip technologies inevitably drives up manufacturing costs, posing a potential threat to the affordability of future smartphones.
Indeed, analysts at International Business Strategies (IBS) predicted a significant increase in chip costs with the advent of 2nm process technology, estimating a 50% increase compared to 3nm processors. This increase should lead to a staggering price of $30,000 for each 2nm chip waferwhile chips engraved in 3 nm only cost around $20,000 per wafer.
Smartphone chips will become more and more expensive
According to IBS, the cost of setting up a 2nm chip manufacturing plant with a monthly capacity of around 50,000 wafers is estimated at $28 billion, a notable increase from the 20 billion dollars needed for a 3nm chip manufacturing plant of comparable production capacity. The escalating costs are attributed to the growing need for advanced tools for wafer manufacturing, particularly extreme ultraviolet (EUV) lithography, which is essential for making 2nm chips.
The impact of these rising costs is expected to fall on companies that use advanced manufacturing technologies, including smartphone makers. These are expected to experience the knock-on effect of increased production costs per silicon wafer and per chip, and will then have to pass these increases on the price of their smartphones.
We know that Apple should be one of the first to use this new 2nm engraving, and therefore one of the first impacted by these changes. IBS projects a per-chip cost of $85 for a 2nm “Apple chip,” compared to about $50 today. It is therefore likely that iPhones will experience a further price increase in the coming years. As a reminder, we expect to see the first chips engraved in 2nm arrive in 2025, or even perhaps in 2026.