The world's leading developers of chips that make high-quality video possible on computers rely on Taiwanese manufacturers to make them more competitive, officials from the companies told the Taipei Times last week.
"Taiwan is the center -- our suppliers and major business comes from Taiwan," said Ho Kuo-yuan (何國源), chairman and chief executive of Canada-headquartered ATI Technologies Inc, at the global launch of its newest Mobility Radeon chip in Taipei last week.
"Taiwan is playing a very important role in ATI's growth, helping us to reduce costs and reduce time to market."
A spokeswoman for Silicon Valley rival Nvidia Corp agreed.
"Taiwan plays an important role in Nvidia's strategic operation," Hazel Heng said in an e-mail statement. "Taiwan serves as the headquarters for the world's leading graphics cards, motherboard manufacturers and original-design manufacturers for some of the world's leading brands in the desktop and mobile business," she said.
ATI and Nvidia send the vast majority of their graphics chip designs to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) for production. Once tested and packaged the chips are shipped to notebook, computer, graphics card and motherboard manufacturers also in Taiwan.
Motherboards are the base circuit board on which computer chips are connected and a graphics card can be inserted into a slot on the motherboard to improve a computer's graphics performance, especially for computer games.
ATI and Nvidia's orders account for around 20 percent of TSMC's revenue, according to George Wu (吳裕良), an analyst at Primasia Securities Co in Taipei, and Ben Lee (李輔邦) of research firm Gartner Dataquest Inc in Taipei.
"Graphics chips and graphics cards are very important to the foundry [making chips to order] business because they are big customers who use advanced processes," Wu said. "However, in the longer term, new applications in handsets and consumer devices will mean that communications and consumer chips will make graphics contribute less to revenues as a percentage of the total."
The cost and performance advantages that Taiwanese partners give each company help them to slug it out for market share in the computer graphics industry. ATI claims last quarter more than 75 percent of notebooks shipped with an ATI graphics chip, and Nvidia claims 58 percent of the desktop market, both citing US-based Mercury Research.
However, if chips that provide graphics as only one of many other functions are included in the figures, Intel Corp leads the pack with 31.7 percent of the total market last quarter, according to Mercury. ATI had 24.9 percent and Nvidia 24.7 percent.
The difference between a discrete graphics chip from ATI or Nvidia and an integrated one from Intel is critical when designing for the restricted space of a notebook computer, one expert said.
"When we design our notebooks we have to consider many different factors," said Wesper Yang (楊財發), a technology expert in the personal systems group of IBM Taiwan. "With our newest X40 model we wanted it to be lighter and thinner so the battery, hard disk and DVD drive have to be smaller. We chose [an Intel chip] as its power management features were better, allowing us to make the battery smaller."
Intel's integrated chips work better with other Intel chips on the motherboard, making a system that functions more smoothly, Yang added, but there is a trade-off in that Intel's graphics are not as good as ATI's or Nvidia's, he said.
IBM offers notebooks with ATI graphics, but does not have any Nvidia models.
Companies like IBM choose ATI for their notebooks as the company focuses on mobile users, CEO Ho said.
"Our mind-set is to provide the same products and features on notebooks as are found on desktops," he said. "We were the first to provide 3D graphics on notebooks, then we added DVD playback and a lot of other features. And now that notebook screens are as big as desktops', there is a greater demand for better graphics."
Nvidia's Heng said that her company was improving its performance in the notebook market, citing a 12 percent increase last quarter reported in Mercury's figures.
"Many of the world's leading notebook manufacturers, such as Toshiba, Apple, Dell, Samsung, Sharp and Sony, have adopted our GeForce FX Go series GPUs [graphics processing units]."
Gartner Inc and International Data Corp have predicted the notebook computer market will reach almost 70 million units by 2007 compared to around 160 million desktops the same year. This means notebooks will be 30 percent of the total computer market, up from 23 percent last year.
The major driving factors for the switch to notebooks are gaming and multimedia functions like TV tuners and DVD-quality video via the Internet as well as mobile working trends, the researchers have predicted.
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