TSMC's Wafer Prices Soar: Apple Pays $18,000 for 3nm Chips

The cost of producing Apple's A-series chips has skyrocketed, with TSMC now charging $18,000 for a 3nm wafer, more than triple the price of a 28nm wafer a decade ago, reports Tom's Hardware, citing industry analyst Ben Bajarin.

This price hike reflects the significant advancements in Apple's A-series processors, which have seen a dramatic increase in transistor count, cores, and features. The A7 chip, found in the iPhone 5s, contained 1 billion transistors, while the A18 Pro, in the iPhone 15 Pro, boasts 20 billion transistors.

"As Apple's A-series chips have evolved, their transistor count has consistently increased," says Bajarin, CEO and principal analyst at Creative Strategies. "The most substantial transistor density increases occurred in the earlier nodes, such as transitions from 28nm to 20nm and then to 16nm/14nm. However, recent process technologies (N5, N4P, N3B, N3E) exhibit slower density improvements."

Despite the slowing pace of transistor density advancements, the cost of production has risen sharply. The price per wafer has increased from $5,000 for the A7 to $18,000 for the A17 and A18 Pro, while the cost per square millimeter has climbed from $0.07 to $0.25.

This increase in cost reflects the complexity of manufacturing the latest chips, including the need for advanced materials and equipment. However, the rise in wafer prices also highlights the premium that Apple is willing to pay for cutting-edge technology and performance.

"Given it is harder to pull out IPC gains, but getting efficiencies where they can even if its costs related to area increase, [is a viable] performance-per-watt [gain] strategy," Bajarin told Tom's Hardware.

While the latest A-series processors have seen a slowdown in performance gains, Apple has managed to maintain improvements in performance-per-watt with each new generation. This efficiency is crucial for extending battery life and delivering optimal performance in Apple's mobile devices.

It is important to note that the information cited by Tom's Hardware comes from a third-party supply chain report, and the company behind it has sources at TSMC. However, the publication emphasizes the need to take this information with a grain of salt, as it is not official information from TSMC.

Interestingly, Apple's status as an early adopter of TSMC's latest process technologies positions the company favorably in terms of cost. The company has the opportunity to fine-tune manufacturing processes to reduce defects and increase yields, leading to a lower cost per chip. Additionally, Apple is reportedly the only TSMC customer that pays on a per-chip basis rather than per-wafer, further differentiating the company from other clients.