A16 Chip in iPhone 14 Pro Reportedly Costs Apple Over Twice as Much as A15 Chip

[JPack]

It goes both ways. Who is TSMC selling this excess capacity to? Who is selling hundreds of millions of devices?

Also, there are other ways to lower costs. Apple could've just overclocked an existing 5nm chip and not talked about it.

It goes without saying a $50 increase is nontrivial to any production cost.

TSMC doesn't build N4 capacity unless there is contracted demand. Apple would have agreed to a price increase before TSMC built the lines.

You can't simply overclock a chip. Each of the blocks on the SoC are hand tuned for a certain target frequency. That's how Apple achieves great power efficiency. If you overclock, power and voltage will go up much faster than the clock.

$50 isn't trivial, but at the same time, Apple doesn't adjust prices annually. There is no way iPhone X and iPhone 14 Pro have the same materials cost even though both are $999.

 

[citysnaps]

Anybody of sound mind knows demand isn't inelastic given global economic conditions.

How does Apple not "accept" such a price increase when TSMC is the world's sole leading edge semi foundry? Does Tim Cook have a secret N4 fab in his garage?

You're saying Tim Cook doesn't know what he's doing?

Yeah... I guess Apple has just been getting lucky all these years winging it and yet somehow being one of the most successful companies in the world. Amazing!

 

[ipedro]

The only problem with having the phone run it, is how to tranmsit the data to the headset in real time.

This is a solved problem that we use every day. AirPlay 2 can transmit 4K video in real time from an iPhone to a TV. The technology has developed further in recent years with SharePlay.

Better yet, the iPhone wouldn’t need to send millions of pixels to the glasses as it does in AirPlay. It would send text and shapes and their coordinates and attributes for the glasses to draw and display. In reverse, the glasses wouldn’t need to send images from its camera, it would only send wireframe vectors from its LiDAR to the iPhone for processing.

AR is incredibly processor intensive. If Apple is planning lightweight glasses with thin frames and arms, then they still have a few years of miniaturizing A-class chips. The entire assembly of an Apple Watch, including the battery but minus the Taptic Engine, would fit distributed in the arms and frames of glasses but Apple Watch is still not powerful enough to run AR computations.

 

[DownUnderDan]

People don't buy new iPhones because they need more speed. They buy them because of the new features, better cameras, etc. So a faster phone doesn't buy longevity for most people, features do.

I think there is a fair share of people who buy the latest iPhone because they want to be seen with the latest iPhone. Its more a want than a need.

 

[JPack]

You're saying Tim Cook doesn't know what he's doing?

Yeah... I guess Apple has just been getting lucky all these years winging it and yet somehow being one of the most successful companies in the world. Amazing!

He's not perfect.

Just look at the Qualcomm fiasco. Apple tried to ditch them but ended up paying a $6B penalty to end up exactly where they were before.

There is nobody else simliar to TSMC in this world.

 

[montuori]

Goggles will presumably have much more usable space for processing power and battery than a skinny brick in our pockets.

I see where you're going with that and don't disagree about finding creative ways to use more space. But I think that weight will be a factor. My current eyeglasses, for instance, weigh in at 33g and that's pushing the bounds of what I find tolerable.

 

[Mojohanna32]

They have in the past over exchange rate changes, so I'd be cautious about being so sure.

Exchange rates are quite a bit different than component costs. Exchange rates go up and down. Components go up, rarely go down.

 

[iPhoneFan5349]

Could be. Animations, different settings could cause perceptual slowness.

It’s probably just how messed up is iOS16 right now.

 

[I7guy]

He's not perfect.

Just look at the Qualcomm fiasco. Apple tried to ditch them but ended up paying a $6B penalty to end up exactly where they were before.

There is nobody else simliar to TSMC in this world.

Nobody is perfect. But he has a great ability to turn on a dime.

 

[I7guy]

It’s probably just how messed up is iOS16 right now.

Or maybe animations and settings.

 

[rp2011]

I can't see that the phone needs a faster chip. My guess is the only reason for using the new chip is the energy saving.

That's EXACTLY what Blackberry and Palm said. That's exactly the the type of complacency if left unchecked that will destroy any company. They have to keep forging forward before someone comes and out innovates.

 

[citysnaps]

He's not perfect.

Just look at the Qualcomm fiasco. Apple tried to ditch them but ended up paying a $6B penalty to end up exactly where they were before.

There is nobody else simliar to TSMC in this world.

"He's not perfect."

Of course. Who is?

Apple's customer base of many millions customers, many repeat, speaks for itself. As does Apple's sales and valuation. He's doing an outstanding job being responsible for more than 150,000 employees.

Getting back to TSMC... Apple's purchasing managers will always negotiate contracts for better prices as they would with any supplier. That's a given. They would be derelict not trying.

In the end it makes no difference. Apple will raise prices in order to hit their 40% GPM.

 

[teh_hunterer]

I can't see that the phone needs a faster chip. My guess is the only reason for using the new chip is the energy saving.

You can't just look at it in a vacuum. The iPhone chip advancing every year transitioned into Apple Silicon being used in the Mac.

 

[Greenmeenie]

What happens after 2nm chips? 1nm? Then what? Quantum level chips? Sub Atomic? 😂

 

[CarAnalogy]

What happens after 2nm chips? 1nm? Then what? Quantum level chips? Sub Atomic? 😂

Yeah, quantum.

Also Intel on an extremely optimistic roadmap slide started talking about .7nm, .5nm etc

 

[SoldOnApple]

Twice the cost but only 17% faster? Why didn't Apple just put two A15 chips in the Pro then.

 

[teh_hunterer]

Twice the cost but only 17% faster? Why didn't Apple just put two A15 chips in the Pro then.

The same reason they don't put the M2 in the iPhone, or the M1 Max in the iPad.

 

[AmazingTechGeek]

The cost to purchase remains the same but they sell more devices because the cost remains the same…🤪

I totally get what this means. Very good point

 

[atomic.flip]

You're saying Tim Cook doesn't know what he's doing?

Yeah... I guess Apple has just been getting lucky all these years winging it and yet somehow being one of the most successful companies in the world. Amazing!

Tim Cook knows supply chain management. That is his area of expertise. Always has been and remains so today.

If you bothered to follow his career you'd know that.

And IF.... IF... these figures are true then it's a pretty awful outlook for future chip development. 10-15% increase in speed / efficiency with only 2.5x the cost required?

Even Tim Cook knows that's a bad deal.... and certainly no wonder they chose to stick the A15 in every other iPhone this year outside the Pro models.

 

[svish]

Might see a price hike next year for the Pro models.

 

[HobeSoundDarryl]

What happens after 2nm chips? 1nm? Then what? Quantum level chips? Sub Atomic? 😂

Since 5nm is not a real measure either- just a marketing claim- the marketing team will easily come up with all kinds of spin to keep the train rolling down the track. For example, divide an actual nm into 10 segments and spend about 10 years working through a 1 (more not really) nm change. Divide by 100 to cover that (not really) 1nm shrink for a century of updates.

No good marketer is going to let even the laws of physics get in the way of commerce.

 

[citysnaps]

Tim Cook knows supply chain management. That is his area of expertise. Always has been and remains so today.

If you bothered to follow his career you'd know that.

And IF.... IF... these figures are true then it's a pretty awful outlook for future chip development. 10-15% increase in speed / efficiency with only 2.5x the cost required?

Even Tim Cook knows that's a bad deal.... and certainly no wonder they chose to stick the A15 in every other iPhone this year outside the Pro models.

"If you bothered to follow his career you'd know that."

Bothered? To follow his career? My...how presumptuous of you.

I'm quite familiar with both TC's education and career.

It sounds like you have extensive engineering experience in complex cpu/gpu chip design, long-term road map development, fabrication, dynamics of pricing, foundry competition (or lack of), etc. And fully understand Apple's motivations for going forward with the A16 and how it impacts Apple's success going forward.

Please share your extensive expertise at Apple with Johny Srouji, design engineers, managers, Tim Cook, and help guide them towards success.

And most importantly, help them to not make more bad deals in the future. You appear to know things that have never crossed their mind, let alone extensively sussed out and debated internally at Apple.

 

[atomic.flip]

That's EXACTLY what Blackberry and Palm said. That's exactly the the type of complacency if left unchecked that will destroy any company. They have to keep forging forward before someone comes and out innovates.

Indeed... it's an extremely dangerous attitude to take given the competition.

Apple has one large bed they can sleep in pretty soundly and that is their content platform... but.... I've seen that starting to shift and sway with modern streaming platforms for music and films being both competitive in price and performance as well as content excluding

"If you bothered to follow his career you'd know that."

Bothered? To follow his career? My...how presumptuous of you.

I'm quite familiar with both TC's education and career.

It sounds like you have extensive engineering experience in complex cpu/gpu chip design, long-term road map development, fabrication, dynamics of pricing, foundry competition (or lack of), etc. And fully understand Apple's motivations for going forward with the A16 and how it impacts Apple's success going forward.

Please share your extensive expertise at Apple with Johny Srouji, design engineers, managers, Tim Cook, and help guide them towards success.

And most importantly, help them to not make more bad deals in the future. You appear to know things that have never crossed their mind, let alone extensively sussed out and debated internally at Apple.

LOL... as a matter of fact... you likely don't genuinely care what my CV states... but let's say it includes all that and more.

A little old school insider info... Samsung wouldn't budge on a 25 CENT increase in price to the BOM on phone designs back in 2005 just to include "Bluetooth" in a PALM flip phone that never saw the light of day in the United States (or any market outside of Mexico for that matter).

So a doubling of price for the CPU in a smartphone is a pretty big F---- increase. I don't care how rich a company is. The shareholders won't go for it when they review the P&L statements. Greed is king there and the only thing that makes them happier than higher profit margins is being as aggressive as you can with cost cutting and cost savings.

But hey... you've been building your Macrumors resume posting thousands of times while I must have been.... working. Hahaha

(And no I don't work for Samsung or Apple... at least.... not presently LOL)

 

[Carrotcruncher]

It’s a great chip. The 14 Pro Max is blazing fast compared to my 11 Pro Max. I can’t believe how quick it is.

Argh, I am trying to be scrooge and keep my Iphone 11, but I can feel the Apple force !

 

[ApplesAreSweet&Sour]

And people complain about them using last years chips in base model 14’s this year.

I hope this trend continues. Chips cost more, so Pro should get them because they cost more.

Bring on the hate. 👊😙👍

You’d agree with whatever Apple does so why bother arguing with you in the first place?