Santa Clara, Calif. - Graphics processor supplier Nvidia Corp. last week lowered its gross-margin expectations for the second quarter ended July 27. The company said it would meet its previously stated sales forecast of approximately $455 million to $460 million for the quarter. Those results are to be announced on Thursday.
Nvidia said its gross margins for the second quarter are expected to be slightly lower than the company's original guidance. "This was a result of higher-than-anticipated product costs attributed to 0.13-micron semiconductor process technology," the company said.
While fabless Nvidia did not identify its foundry partners, its chips are mainly produced by Taiwan Semiconductor Manufacturing Co. (TSMC) and IBM Corp.'s Microelectronics Division.
In March, IBM scored a major coup in the silicon foundry business when it announced a multiyear alliance with Nvidia. Under terms of their agreement, IBM will make Nvidia's next-generation GeForce graphics processor line in its 0.13-micron technology.
TSMC is expected to process 95 percent of Nvidia's wafers in 2003, according to a report from investment-banking firm Pacific Crest Securities Inc. (Portland, Ore.). IBM Microelectronics will make the company's higher-end chips, analysts say.
The shift toward 0.13-micron technology has been a challenge for many chip makers and foundries, prompting Semico Research Corp. to lower its 2003 forecast.
Chuck Byers, TSMC's head of branding, claimed in a recent interview that the company's 0.13-micron technology is superior to IBM's process. But sources said TSMC's 0.13-micron yields actually range anywhere from 40 percent to 70 percent, depending on the product line.
Meanwhile, IBM's foundry unit has been hurt by a "slow improvement in yields" at 0.13-micron technologies, according to SG Cowen Securities Corp.
Mark LaPedus is editor of Semiconductor Business News, an EE Times Network Web site.