Wafer discounts, rush orders from MediaTek, Nvidia

According to reports, the supply of chips from foundries in Taiwan is being complicated by discounting and rush orders as companies try to benefit from more-available 40nm silicon to win against chips design in less available 28nm. Rival Taiwan foundries TSMC and UMC have both been offering wafer discounts to try and pull in orders for Q4, said a Taiwan Economic News report.

Those discounts are being offered for the mainstream nodes at 45nm/40nm, at 65nm and larger geometries, the report stated. But another report from the same publication stated that two fabless chip companies—Nvidia and MediaTek—are "vigorously increasing contracts" for 40nm foundry capacity at Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) 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 4Q12 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 five percent on wafers produced using 40nm and other mainstream process technologies with effect from September. No sources were given.

In 2Q12 the 28nm node was responsible for seven percent of TSMC's revenue, while the 40nm and 65nm nodes were responsible for 28 and 26 percent, respectively. The discounts are being offered to boost order placement because capacity utilization—excepting 28nm production—has been easing off at both foundries, the report added.

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.

- Peter Clarke
??EE Times