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UMC sells new chip line

Taiwan's second-largest maker of made-to-order chips, United Microelectronics Corp (UMC, 聯電), confirmed yesterday that it had orders for its new super-dense chips.

UMC is now shipping chips with transistors measuring 90 nanometers across, or less than one thousandth the width of a human hair. The chips squeeze in more processing power on the same piece of silicon. Rival chipmakers developed 90nm chips last year, but UMC is the first to announce that it has orders for the chips.

"This is an engineering product that our customers are sampling," UMC's spokesperson Alex Hinnawi said. "It's a functional chip, not necessarily a mass-production chip."

Hinnawi would not reveal the customer or the amount of chips produced so far, but US-based Xilinx Inc announced Wednesday that it had received the world's first 90nm chips from both IBM and UMC. "Functional [90nm] chips have been produced at both IBM and UMC," the statement said.

Increasing the density of chips is especially important for the new generation of semiconductors that need a lot of processing power, like graphics chips. And packing more into the same piece of silicon reduces costs, Xilinx claims, by up to 70 percent.

"The industry needs to shrink the technology to make chips smaller so that costs can be kept down," said Alfred Ying (應宗傑), an analyst at BNP Paribas in Taipei.

In addition to shrinking the technology, chipmakers have been increasing the size of the disks of silicon, or wafers, from which chips are cut to increase efficiency and cut costs further. By increasing wafers to 12 inches in diameter from the current standard of eight inches, chipmakers expect to gain a 40-percent cost saving.

But analysts rained on UMC's parade yesterday, saying there isn't a significant enough market for 90nm products yet.

"I don't think the announcement is so important right now," Ying said. "There is no demand in the market for 90nm products and the technology is still not mature enough for mass production."

Mainstream products are currently made using 150nm and 180nm technology.

Another analyst said the announcement was intended merely to prove that UMC can make 90nm products, like rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) which demonstrated its first 90nm chips one year ago.

"I think UMC made this announcement to demonstrate that they have the capability to make 90nm products," said James Huang, (黃建銘), an analyst at SinoPac Securities Corp (建華證券).

"However, 90nm wafer shipments are very small at present. I don't think UMC will have a commercial run before the end of the year."

TSMC's spokesperson also warned against reading too much into UMC's announcement. "People should look at the reality and ask how and when they are going into mass production," Tzeng Jinnhaw (曾晉皓) said.

Tzeng said UMC and TSMC would ramp up production of 90nm chips together in the second half of the year.

For now, chips with 130nm technology are expected to account for the biggest increase in orders at both companies, the analysts said.

"This year 130nm chips will be more significant," Huang said.

TSMC and UMC set up 12-inch wafer fabrication plants last year to prepare for the upcoming market for 130nm and 90nm chips. TSMC is currently able to ship between 8,000 and 10,000 12-inch wafers each month, and UMC between 5,000 and 8,000, according to estimates made by Huang and Ying. By the end of this year, the capacity could top 15,000 per month.
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