Rising Chipset Prices Push Smartphone Manufacturers To Adjust Strategies

The adoption of TSMC’s 3nm technology by Qualcomm and MediaTek is witnessing a shift in the smartphone chipset market, resulting in increased prices for flagship devices. As manufacturers like Vivo raise the prices of their latest models, the industry grapples with the financial implications of the emerging technology.

This year, major players in the smartphone chipset arena have transitioned to TSMC’s 3nm lithography, with the Dimensity 9400 leading the charge. However, this advancement comes at a steep cost, compelling phone manufacturers to increase prices. Vivo, for instance, has raised the price of its new X200 series by 7.5 per cent, reflecting the financial strain associated with the latest chipsets.

Last year, Apple was the sole company to introduce 3nm chipsets, introducing the A17 Pro and the M3 family. MediaTek and Qualcomm opted against TSMC's older 3nm ‘N3B’ node, primarily due to prohibitively high tape-out costs, estimated at around USD 1 billion for Apple’s M3 series. This financial barrier prevented them from utilising the technology sooner, pushing them to innovate with the Dimensity 9400 as a response to remain competitive.

Despite this strategic move, the transition to 3nm N3E technology has forced MediaTek’s partners to adjust their pricing structures, with reports reflecting an average increase of 7.5 per cent for flagship models. In contrast, Apple has maintained its starting price for the iPhone 15 Pro at USD 999, only introducing a USD 100 premium for the Pro Max by offering enhanced storage options.

While specific production costs for the Dimensity 9400 remain unclear, rumours suggest a price point of USD 155, marking a 20 per cent increase over the Dimensity 9300. As chipset prices continue to escalate, MediaTek finds itself limited to TSMC, particularly as Samsung struggles to enhance the yields of its own 3nm GAA process. This confluence of factors is likely to drive further price increases as the transistor count rises and lithography advances.

The implications of these rising costs extend beyond just chipsets. Consumers may face higher prices for flagship smartphones, prompting a re-evaluation of value versus performance in an increasingly competitive market.