According to Wccftech, Apple’s upcoming C2 5G modem will use TSMC’s 4nm ‘N4’ manufacturing process rather than the cutting-edge 2nm technology that will power the A20 and A20 Pro processors. The report indicates that the iPhone 17 lineup will be Apple’s last to use Qualcomm modems, with the transition to in-house C2 chips planned for the iPhone 18 series in 2026. Analyst Ming-Chi Kuo previously noted there’s little incentive to use the newest lithography for modem chips since they’re not the most power-hungry smartphone components. The C2 will reportedly support both mmWave and sub-6GHz 5G networks, representing a significant upgrade over current in-house modems. This strategic manufacturing decision reflects Apple’s calculated approach to component development.
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The Pragmatic Reality of Modem Design
What many consumers don’t realize is that modem design operates on fundamentally different principles than processor design. While Apple’s A-series chips benefit dramatically from process shrinks—gaining performance and efficiency with each new node—modems have different optimization priorities. The physical layer processing in modems involves analog and mixed-signal circuits that don’t scale as efficiently with process technology. More importantly, modern cellular modems must maintain backward compatibility with decades of legacy standards, requiring circuit designs that are proven and stable rather than cutting-edge.
TSMC Capacity and Cost Dynamics
Apple’s decision makes even more sense when considering TSMC’s manufacturing economics. The 4nm process is now mature, with high yields and established production lines, whereas 2nm represents the bleeding edge with initially limited capacity and premium pricing. By reserving 2nm for their highest-margin components (A-series processors) and using 4nm for modems, Apple optimizes both performance and cost. This is particularly crucial given that reports indicate Apple has secured over half of TSMC’s initial 2nm supply—a strategic allocation that ensures their flagship processors get priority access to the most advanced technology.
The Qualcomm Transition Timeline
Apple’s modem journey has been longer and more complex than many anticipated. The company began its in-house modem development after acquiring Intel’s smartphone modem business in 2019, but creating competitive cellular technology has proven challenging. The phased approach—starting with the C1 in iPhone 16e, then C1X, and finally the full-featured C2 for iPhone 18—shows Apple’s methodical strategy. By 2026, when the C2 launches, 5G technology standards will have matured significantly, reducing the performance gap between established players like Qualcomm and Apple’s in-house solutions.
Competitive Implications and Market Positioning
This manufacturing strategy reveals Apple’s broader component philosophy: use cutting-edge processes where they provide tangible benefits to users, and mature processes where they offer better value. While competitors might tout “all 2nm” or “all 3nm” designs, Apple’s segmented approach likely delivers better overall system performance and battery life. The modem’s integration with iPhone hardware and software could also compensate for any process disadvantages through system-level optimization—an area where Apple has consistently excelled.
The Future of Apple Silicon Integration
Looking beyond 2026, this modem strategy suggests how Apple might approach other specialized components. We could see similar “right-sized” manufacturing decisions for WiFi/Bluetooth chips, power management ICs, and even future health sensors. The era of throwing the latest process technology at every component appears to be ending, replaced by a more nuanced approach that matches manufacturing technology to specific component requirements and performance characteristics.
