Thu, Feb 26, 2004 - Page 10 News List

TSMC gets chip deal with Nvidia

WORKING TOGETHER With its partnership with IBM failing to produce results, Nvidia says it now wants to work with TSMC on its latest graphics chips

By Bill Heaney  /  STAFF REPORTER

Nvidia Corp, the world's leading designer of chips for computer graphics, plans to use the most advanced technology from the world's No. 1 contract chip manufacturer, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to produce new products, statements from both companies said yesterday.

The companies plan to produce chips with transistors measuring just 0.11 microns across.

"This new manufacturing technology, along with numerous architectural enhancements, enables us to continue delivering products that allow end-users to interact with a wide variety of digital devices," Nvidia vice president Di Ma said in the statement.

But analysts hinted that an unsuccessful trial run of more advanced 90-nanometer (nm) chips at International Business Machines Corp's IBM Microelectronics may be behind Nvidia's decision to make 0.11-micron chips at TSMC instead. A micron is a millionth of a meter and a nanometer is a billionth of a meter.

"One of the reasons behind this decision is that things at IBM are not working out," said Rick Hsu (徐禕成), an analyst with Nomura Securities in Taipei. "Nvidia tried the 90nm process at IBM, but yield is a very severe issue, so instead of trying a similar technology at TSMC, Nvidia has taken one step back, trying the 0.11-micron process as it is easier for foundries to ensure yield."

The contract chip manufacturing, or foundry, business is shrinking the size of transistors on each piece of silicon to increase output and cut costs. Current standard 0.18- and 0.15-micron transistors are being shrunk to 90nm at the most advanced foundries. Each step down to smaller transistors has to be tested in pilot runs that have a proportion of spoiled chips. The good chips are called the "yield."

Nvidia opted to try IBM's 90nm production technology last spring, but so far has had disappointing yields, the analysts said. Opting for TSMC guarantees good yields, they added.

"TSMC's 0.11-micron process can increase output by 40 percent compared to the 0.13 micron [process]," said George Wu (吳裕良), an analyst at Primasia Securities Co in Taipei. "The 0.11-micron process is already working, and requires few changes, but 90nm needs a whole new process and new machines -- it is more for promotion purposes than actual production."

IBM entered the made-to-order chip business last year, but has had a difficult time shaking off its in-house production attitudes, thereby disappointing customers, Wu said.

"IBM has no real experience in the foundry business," Wu said. "I think in the long run, Nvidia will finish working with IBM."

But Nvidia has said that it plans to continue working with IBM.

"As we grow in our business, we need the supply of chips from two foundries to effectively supply our needs on an ongoing basis," Hazel Heng, Nvidia's marketing manager for the Asia-Pacific region, told the Taipei Times in a recent interview. "Both IBM and TSMC are world-class foundries and they will both continue to be our important manufacturing partners."

Nvidia is TSMC's largest customer, accounting for around 20 percent of the company's NT$16 billion sales last year, analysts said.

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