According to a Nikkei Asia article, Apple’s new A16 Bionic processor, included in the iPhone 14 Pro and iPhone 14 Pro Max, costs $110 to make, making it more than 2.4 times as expensive as the A15 chip seen in the iPhone 13 Pro models unveiled the previous year.

The A15 is a 5nm chip, whereas the A16 is made using TSMC’s 4nm process, which is likely a contributing factor to the A16’s higher cost. With reports stating that the A17 processor in iPhone 15 Pro variants would be built on TSMC’s 3nm process and a DigiTimes report this week claiming that TSMC will start mass producing 2nm chips in 2025, the cost of iPhone chips may continue to rise as shrinking progresses.

The A16 chip performs multi-core operations 15% to 17% quicker than the A15 chip, according to Geekbench 5 benchmark findings. The A16 chip is exclusive to the iPhone 14 Pro and iPhone 14 Pro Max; the iPhone 14 and iPhone 14 Plus have the same A15 chip with a five-core GPU as the iPhone 13 Pro versions.

In a joint investigation with Fomalhaut Techno Solutions, a Japanese research company that specializes in bill-of-materials analysis and reverse engineering, Nikkei discovered that the average production costs for the iPhone 14, iPhone 14 Pro, and iPhone 14 Pro Max have increased by about 20% when compared to the equivalent previous-generation models.

The report asserts that because Apple did not raise prices for its most recent iPhone models in the United States and some other markets, the company’s profit margins have “likely shrunk” as a result of higher production costs. However, prices did rise in important markets like the United Kingdom, Australia, and Japan amid a strong U.S. dollar relative to other currencies.