By moving to the larger wafers, Altera expects to dramatically increase the number of chips produced for every wafer lot and eventually lower the cost of producing FPGAs. The chips will be produced at Taiwan Semiconductor Manufacturing Co., Altera's long-time manufacturing partner.

Some customers, particularly those in Japan, are concerned that product characteristics could change, and are asking for new product data sheets or samples so that they can retest the parts in real systems, said Tim Colleran, vice president of marketing for San Jose, Calif.-based Altera.

For its part, Altera expects the transition to be smooth. The first parts to move to 300-mm wafers will be the mid-density Stratix device, and will use the same mask set used for 200-mm wafers and are electrically identical.

"The biggest concern is uncertainty, until you show them that it uses the same mask set and show the same reliability data," Colleran said. "They view it as a much bigger transition that it actually is."

One of those worries is the so-called "edge effect," where the die that is produced around the edge of the wafer tends to be lower yield. But Colleran said the new manufacturing equipment for 300-mm wafers has been designed for more precise process control, and that edge effects are nearly eliminated. "Long term the new equipment will provide better yields," he said.

In choosing the 1S25 as the first parts to move to 300-mm wafers, Altera said it wanted to stay in the mid-density range as a way to maximize yields. Higher density products yield fewer die per wafer, lengthening the time it takes to refine the manufacturing process. The company's newer Cyclone products have a much smaller die but aren't shipping in enough volume to justify the move. This product family and its transceiver-based Stratix devices, the GX series, will make the transition in 2004.

In contrast to its main competitor Xilinx, Altera opted to qualify and deliver its first 0.13-micron products on conventional 200-mm wafers before shifting to 300-mm. At one point the company had considered moving quickly to 300-mm wafers for its high-end Stratix devices, but decided it was too risky to make both changes simultaneously.

"We have a good cost structure now at 0.13-micron," Colleran said. "As a company we are also trying to sell time to market and we don't want to do anything to counter that if we can help it," he said.

For Altera, it now makes sense to shift to 300-mm wafers because the cost of production is equal to 200-mm wafer production. Going forward the relative cost of producing 300-mm wafers should fall below 200-mm wafers. Until recently wafer yields had been too erratic to make this claim. "There's still yield variability but it's tailing off pretty quickly," Colleran said.

Samples of the first Stratix part to come off 300-mm wafers, the 1S25, should be ready by June. Altera will also provide customers a process-change notification along with qualification and reliability data, a white paper summarizing the new process, ordering information and a production schedule.

In general, Altera's projected FPGA prices will not change as a result of the shift to 300-mm wafers since the company had already anticipated the process transition when the products were introduced, Colleran said.