Apple’s key supplier TSMC is looking ahead to a strong year in terms of profitability, even if total revenue is lower, driven by production of new iPhone chips.

Via Digitimes, TSMC is set to manufacture the system-on-a-chip for 2018 iPhones, dubbed Apple A12. The chip wafers are expected to be made with a 7 nanometer process. The current A11 chip inside iPhone X and iPhone 8 uses a 10nm feature size.

The current iPhone chips feature an A11 SoC, which houses the Apple-designed processor, GPU and other parts.

The chip wafer feature sizes are measured in nanometers but the industry is still pushing to make the gaps smaller. For 2018, it looks like Apple will go from 10 nm in the A11 Bionic chip to 7nm in the A12 chip. Smaller process sizes tend to lower costs whilst increasing density, which leads to chips that can run faster at the same heat output.

7nm fabrication is still very new; the A12 is expected to be one of the first mass-production chips to be made at 7nm. Whilst iPhone sales may sag slightly, TSMC can expect higher profitability from Apple’s orders because it can command a higher price margin from the cutting-edge chip manufacturing processes.

We are expecting to see three new models of iPhone this year. There will be a new 5.8-inch OLED iPhone, a successor to the iPhone X with little change to external design.

There is also expected to be a larger 6.5-inch OLED iPhone with the same bezel-less design as iPhone X, bringing a larger screen to a device with approximately the same physical size as an iPhone 8 Plus.

Finally, Apple is set to release a new 6.1-inch LCD iPhone model. This will probably be the more affordable option, as the substitute for the $699 iPhone 8 in the current lineup. The 6.1-inch iPhone will feature slim bezels and no home button, relying on Face ID for unlock and authentication. All three phones should be unveiled by Apple at a media event in September.

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About the Author

Benjamin Mayo

Benjamin develops iOS apps professionally and covers Apple news and rumors for 9to5Mac. Listen to Benjamin, every week, on the Happy Hour podcast. Check out his personal blog. Message Benjamin over email or Twitter.