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TSMC 28nm ramp-up within expectations, says Digitimes Research
Jessie Shen, DIGITIMES, Taipei [Tuesday 17 April 2012]

Taiwan Semiconductor Manufacturing Company (TSMC) could ramp up its 28nm production capacity at a much faster pace than older 40/45nm and 65nm process nodes, according to Digitimes Research analyst Nobunaga Chai. To make such speculation about yield problems with TSMC's 28nm processes is unfair, said Chai, adding that the foundry is actually improving the process yield rate within its expectations.

When TSMC started ramping up its 40/45nm production capacity, it took 5-6 quarters to have the process contribute 10% to company revenues, Chai pointed out. As for 65nm, the period was shorter but still longer than three quarters allowing the process to account for 10% of TSMC's revenues, Chai said.

The newer 28nm technology started generating revenues in the fourth quarter of 2011, and the sales ratio is estimated at about 5% in the following quarter, Chai noted. It is anticipated to see TSMC significantly ramp up its 28nm production capacity later in 2012, Chai believes.

TSMC's current yield rate on its 28nm processes is not poor at all, but maybe has not yet reached a certain level that is able to persuade the company to expand capacity aggressively, Chai indicated. Despite being cautious, TSMC's 28nm expansion plans have been kept on track, Chai said.

In addition, let's not forget that 28nm is still new in the industry, Chai said. Making chips using the process is still not stable and some companies recognize it is a risk to their products, Chai observed. Apple, for instance, still uses 45nm to manufacture its newest A5X chips.

TSMC previously had yield problems with its 40/45nm process technology, and saw the ramp-up schedule interrupted. Revenues from the nodes accounted for as little as 1% in the first half of 2009. The proportion climbed slightly to 4% in the third quarter, and finally approached 10% in the last quarter of the year.

Around mid-2009, Rick Tsai resigned from his position as TSMC CEO, with chairman Morris Chang returning to the helm. Later in the year, TSMC hired its former VP of R&D Shang-Yi Chiang to again lead its R&D.

TSMC in October 2011 entered volume production for its 28nm processes. Sales of 28nm accounted for 2% of TSMC's revenues in the fourth quarter of the year.

Chang remarked previously that TSMC's 28nm process technology would play an important source of company growth in 2012.

TSMC: Sales contribution made by 65nm during ramp-up

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

40/45nm

0%

0%

0%

0%

0%

0%

0%

0%

0%

1%

65nm

0%

1%

3%

7%

10%

15%

18%

25%

27%

23%

Source: Company, compiled by Digitimes, April 2012

TSMC: Sales contribution made by 40/45nm during ramp-up

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

28nm

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

2%

40/45nm

1%

1%

4%

9%

14%

16%

17%

21%

22%

26%

27%

27%

Source: Company, compiled by Digitimes, April 2012

TSMC: Sales contribution made by 28nm during ramp-up

4Q11

1Q12(e)

28nm

2%

5%

Source: Company, compiled by Digitimes, April 2012

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