LONDON – The supply of chips from foundries in Taiwan is being complicated by discounting and rush orders as companies try to benefit from more-available 40-nm silicon to win against chips design in less available 28-nm, according to reports.
Rival Taiwanese foundries TSMC and UMC have both been offering wafer discounts to try and pull in orders for the worryingly quiet fourth quarter of the year, according to a Taiwan Economic News report.
Those discounts are being offered for the mainstream nodes at 45-nm/40-nm, at 65-nm and larger geometries, the report said. But another report from the same publication states that two fabless chip companies – Nvidia Corp. (Santa Clara, Calif.) and MediaTek Inc. (Hsinchu, Taiwan) are "vigorously increasing contracts" for 40-nm foundry capacity at Taiwan Semiconductor Manufacturing Co. Ltd. (Hsinchu, Taiwan) to address strong demand for certain of their ICs.
However, TSMC has been forecasting its revenue could dip by as much as a double-digit percentage in the fourth quarter of 2012 due to a weak annual buying season driven by macro-economic uncertainty. The Taiwan Economic News reported that both TSMC and UMC were offering discounts of 5 percent on wafers produced using 40-nm and other mainstream process technologies with effect from September. No sources were given.
In 2Q12 the 28-nm node was responsible for 7 percent of TSMC's revenue, while the 40-nm and 65-nm nodes were responsible for 28 and 26 percent, respectively. The discounts are being offered to boost order placement because capacity utilization – excepting 28-nm production — has been easing off at both foundries, the report said.
According to a second Taiwan Economic News report Nvidia has been ramping contracts with TSMC since June due to strong demand for its Tegra3 processor. Meanwhile MediaTek wants more wafers made containing its MT6575 and MT6577 chips in strong demand for use in smartphones for the Chinese market.
One of the Microsoft Surface computer models is expected to be based on the Tegra3 processor.
Related links and articles:
TSMC says single-customer fabs make sense
TSMC's Chang cuts forecast, sees stall coming
MediaTek cracks top five in smartphone CPU sales
Nvidia sees Q2 sales uptick amid tight 28-nm supply
Qualcomm sees 28-nm capacity crunch through end of 2012