Central processor maker VIA Technologies Inc (
VIA said in a statement that it will use the 0.13 micron process technology developed by Taiwan Semiconductor Manufacturing Co (
VIA, which also designs chipsets, plans to increase its share of the central processor market by targeting the low-end PC, notebook and information appliance markets with its cost-effective Cyrix processors. Intel Corp and Advanced Micro Devices Inc currently take up more than 95 percent of the processor market.
"We are delighted that such a strategic customer as VIA will leverage the benefits of our world-leading technology for its next generation of processors, and are committed to providing them with the support necessary to rapidly bring their products to volume production," said Tseng Fang-cheng (
The statement also said that VIA had already received its 0.13-micron wafers from TSMC and verified their functionality. Volume production should be attained in the second quarter of next year, an official at TSMC said.
As the first company to mass produce central processing units using the most advanced process technology, VIA stands to benefit from lower production costs and, as a result, more competitive prices. The smaller geometry of the process technology will also speed up the processor and increase performance dramatically, analysts said. The processor takes care of all communication in the computer between the hardware and software.
"If the 0.13 micron process succeeds, then VIA's costs will be much more competitive than the Celeron processor," said Peter Wang, an analyst at Fubon Securities Co.
Intel's Celeron processor, also aimed at the low-end value PC market, is VIA's main competitor in that segment of the industry. AMD's low-end processor uses a socket that connects the processor with the computer's motherboard that is different from Intel and VIA's processors.
The processor being manufactured using TSMC's 0.13 micron technology should be the Samuel II, an official at VIA said. Though not officially announced yet, the first processors should run with a speed target of 850 megahertz. The Celeron currently runs at a top speed of 766 megahertz.
Still, being such an advanced technology process, analysts had doubts about the speed with which TSMC will be able to start to mass-produce the chips for VIA.
"If they want to ship the product, the yield rate needs to increase to a reasonable level," said Connor Liu, an analyst at SG Securities. The yield rate refers to the percentage of chips that work out of one wafer.
For a new manufacturing process, TSMC's yield rate could be quite low initially, analysts said. That could deprive VIA of some of the core benefits of the advanced manufacturing process.
"This is a fully new technology, so it will take them time to tune up their yield rate," said the VIA official. As a result, "the cost will be affected by the yield rate, so we don't know what the cost will be yet," he said.
But while the benefits to VIA from the new technology could be compromised, or at least delayed, TSMC stands to gain from both increased orders and the publicity of an order from such a high-profile customer, analysts said.
"An order's an order," said Connor Liu. "That will increase their sales."
TSMC's share price has lost almost a third of its share price since September due to concern about slowing orders and unused capacity. Yesterday, the stock rose 2.78 percent to NT$92.5.
Further, now that VIA has started using the advanced technology to make its processors, other customers of TSMC now have an incentive to follow suit.
"Customers are likely to move to the most advanced technology in order to remain competitive," said Chris Hsieh, senior analyst at ING Barings in Taipei.
They are also likely to move to TSMC rather than any of its competitors if it can demonstrate its ability to mass-produce processors successfully using the 0.13 micron technology process, said Fubon Securities' Wang.
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