Taiwan Semiconductor Manufacturing Company (TSMC) has scheduled a ramp up of monthly capacity at its 300mm (12-inch) wafer fab (Fab 14) located in southern Taiwan at the Tainan Science Park to 6,000 wafers by the end of 2009, and to about 35,000 wafers in 2010, according to sources at chip equipment suppliers.
TSMC declined to comment on the report, citing customer confidentiality.
One reason for the ramp of capacity is that TSMC is gearing up to use Fab 14 as its processor production base over the next few years, as it begins leveraging its partnership with Intel on the Atom platform. According to a note from BNP Paribas, TSMC shifted processor production from Fab 12 to Fab 14 earlier in the year and the foundry is now purchasing backend packaging and testing equipment and plans to allocate capacity of 5,000-6,000 wafers for production of Intel Atom-based processors on a 40nm process. Nanya PCB was named as the substrate supplier.
In March, Intel and TSMC announced they would collaborate on system-on-chip (SoC) solutions based on the Atom processor. Under the agreement, Intel would port its Atom processor CPU cores to the TSMC technology platform including processes, IP, libraries, and design flows. The idea is that Intel can tap TSMC's resources to expand Atom SoC availability for a wider range of applications.
BNP Paribas noted that this partnership between Intel and TSMC will help Intel lower its cost structure to better compete in the mobile space, where it is attempting to compete against ARM-based processors that sell for about half the price of Atom processors. The note indicated a key development in Intel's mobile plans was the strategic alliance it forged with Nokia in June to develop a new class of Intel architecture-based mobile computing device and chipset architectures. Under the partnership, Intel is licensing Nokia's 3G modem IP and using handset market leader to access the MID/smartphone market. This will bring Intel processors into direct competition with ARM-based processors such as those offered by Qualcomm. TSMC's SoC capabilities can help Intel lower its costs and make it more competitive in the mobile space, BNP Paribas stated.
When asked to comment, Intel stated that, just as was publicly announced when it signed its memorandum of understanding (MOU) with TSMC, some Atom processors, but not all, may be manufactured at TSMC. Intel reiterated that it is not offloading all Atom production to TSMC.
The question remains though about just how much Atom manufacturing will be offloaded to TSMC now that the foundry is developing the ability to produce the chips. When Intel and TSMC announced their collaboration, market watchers questioned Intel's motives. The Information Network, for example, suggested that losses at Intel could be estimated at US$200 for each of the five million Atom CPUs manufactured by Intel in the fourth quarter of 2008, and that losses from Atom manufacturing would continue in 2009. Therefore, there might be more to the relationship with TSMC than just collaboration on SoC design, market watchers have speculated.
BNP Paribas said it believes up to 2% of TSMC's revenues in 2010 could come from the CPU segment if it can grab orders for about half of Intel's outsourced Atom production. Even more meaningful shipments can come in 2011 on TSMC's 32nm process.
The securities firm also noted that TSMC is reserving some capacity for production of Larrabee graphics chips in the future. When asked about Larrabee though, Intel simply noted that the product has not even been announced yet. Larrabee is only just being demonstrated as a technology at IDF in San Francisco this week. Intel said that the Larrabee silicon demoed at IDF did not come from TSMC.
A note from Goldman Sachs appears to concur that it is too early to talk about any impact from Larrabee. The investment bank believes that Intel is unlikely to make any significant impact in the mainstream GPU market over the next two years.
In related news, market watchers estimate TSMC will process more 12-inch wafers on 45/40nm processes in the fourth quarter of 2009, with monthly output to ramp up by around 33% sequentially, according to previous reports. Its utilization rate is expected to remain over 80% in the fourth quarter. TSMC said in its latest quarterly report that sales generated from 45/40nm nodes exceeded 1% in the third quarter.
Article translated by Jessie Shen
