While Qualcomm’s next-generation flagship processor, the Snapdragon 8 Elite Gen 5, is eagerly awaited in the tech world, leaked pricing information is causing concern. Recent reports indicate that the unit cost of the new chipset will increase significantly. This could directly impact the prices of Android flagship phones released next year. So, what are the reasons behind this increase, and what lies ahead?
Snapdragon 8 Elite Gen 5 and the Expected Price Increase
According to reliable sources, the per-unit cost of the Snapdragon 8 Elite Gen 5 chipset will be between $240 and $280. This represents a 27% increase compared to the approximately $220 price tag of the current Snapdragon 8 Elite. Therefore, costs for smartphone manufacturers will increase significantly. This increase will inevitably be passed on to the end user, us.
The primary reason for the price increase is Qualcomm’s move of production to TSMC’s advanced 3nm ‘N3P’ process. This new technology offers higher performance and efficiency. However, the flip side of the coin is rising production costs. TSMC’s price hikes for 3nm wafers directly drive up chipset costs. Furthermore, these costs are expected to rise further in the future. For example, the Snapdragon 8 Elite Gen 6, which will be based on TSMC’s 2nm architecture, is expected to exceed the $300 barrier.
Facing rising costs, smartphone manufacturers have two options. The first is to directly reflect these cost increases in prices and offer more expensive flagship phones. The second is to cut back on other phone hardware features (camera, display, build quality, etc.) to keep prices stable. Both scenarios have unfavorable consequences for consumers. Therefore, tech giants have already begun exploring alternative solutions.
Qualcomm is taking a significant step to control rising costs. The company is evaluating Samsung’s 2nm GAA process as a potential alternative to reduce its reliance on TSMC. This “dual-source” procurement strategy could give Qualcomm greater bargaining power. As a result, it could lead to some reductions in chipset prices. Only time will tell how successful this strategy will be.
