On Monday (July 6) Taiwan IT media outlet DigiTimes cited unidentified industry sources in reporting that programmable logic vendor Xilinx Inc. experienced supply constraints due to problems with UMC's 65-nm yield. Xilinx (San Jose, Calif.) last week lowered its June quarter revenue estimate, citing a shortfall in sales due to inability to meet strong demand for its Virtex-5 FPGAs.

Two analysts interviewed by Programmable Logic DesignLine speculated that the cause of the glitch could be related to customer allocation issues in the face of tightening capacity at UMC, noting that 65-nm is a mature process technology and that Xilinx Virtex-5 devices have been in production for months. After establishing record lows in the first quarter, foundry capacity utilization was been on the upswing, including many rush orders, as the outlook for electronics and the economy has improved somewhat.

In a regulatory filing made in Taiwan, UMC said its 65-nm yields have been improving and are consistently steady.

Analysts at FBR Capital Markets said in note circulated Tuesday that they believe the 65-nm issues are related to restarting 65-nm production lines that were shut down during the first quarter. It typically takes up to six weeks to fire up advanced manufacturing lines and ramp yields to over 90 percent, FBR said. Checks suggest that 65-nm yields at UMC should eclipse 95 percent by the end of July, FBR said.

In an email Tuesday, a spokesperson for UMC said the assertions made in the DigiTimes article were false."We have no abnormal yields on our 65-nm process nor do any customers face any yield-based shortages," the spokesperson said.

Taiwan Semiconductor Manufacturing Co., the world's No. 1 chip foundry, has been hurt by poor yields at the 40-nm node that have impacted customers such as Advanced Micro Devices Inc., Nvidia Corp. and Altera Corp.

Xilinx has declined to comment or provide further details about the Virtex-5 supply constraint, citing a financial quiet period. Xilinx has said it expects the supply constraints to be resolved during the September quarter.

FBR adjusted estimates for UMC Tuesday, saying that recent checks indicate that UMC's third quarter shipments will rise 5 percent compared to the second quarter. Earlier estimates had suggested third quarter shipments would be up 10 percent from the second quarter.