TSMC iphone
The Apple iPhone 6S is displayed during an Apple media event in San Francisco. Reuters/Beck Diefenbach

Taiwan-based Apple chipmaker TSMC is teaming up with chip designer ARM to create even smaller chips that could find their way into future smartphones, such as a potential 2018 "iPhone 8" made by Apple. The two companies have entered a multi-year agreement to develop chips that use a 7-nanometer process, which would pack more transistors into a smaller package, the companies said in a joint press release.

By developing denser chips, TSMC could build chips that are smaller and use less power but still provide plenty of performance. It’s an attribute that manufacturers look for in chips to use in ever-thinning smartphones and the small package of a smartwatch. Just don’t expect 7-nm chips in Apple’s 2016 iPhone. Chip manufacturing under the new production process isn’t expected to start until the first half of 2018, according to Taiwan tech site DigiTimes.

That said, TSMC is expected to supply a different set of larger 10-nm processors for Apple’s 2016 smartphone, likely dubbed the “iPhone 7,” according to Reuters. The Taiwanese manufacturer beat out Samsung in the bid to produce the A10 chip for the handset in February.

While Samsung isn’t expected to produce chips for the iPhone 7, Apple may instead tap the South Korean electronics giant to produce OLED screens for an “iPhone 8” in 2018. The display technology would allow Apple to produce an even thinner smartphone, since OLED doesn’t require an additional backlight to light the display, unlike its LCD counterpart. Other potential suppliers for Apple’s OLED screens include LG and Japan Display.

But in the immediate future, Apple is expected to unveil a 4-inch smartphone, an upgraded iPad Air and new Apple Watch bands at a media event set for Monday at its campus in Cupertino, California.