In a research note, FBR said that TSMC may boost its capital spending after "winning high-end CPU biz from AMD." Under the plan, TSMC would make 45-nm processors on a foundry basis for AMD, with "volume ramp in 2Q '08," according to the firm.

This would represent a change in foundry direction for troubled AMD, which is losing money and share to rival Intel Corp. AMD is part of IBM Corp.'s technology alliance, a group of companies that is co-developing IC-manufacturing technologies. AMD is also outsourcing limited chip production to one member of the group: Singapore's Chartered Semiconductor Manufacturing Pte. Ltd.

AMD is looking to boost its chip outsourcing programs after cutting its capital spending. It could end up working with both TSMC and IBM's technology alliance on the processor front. TSMC also makes graphic processors for troubled ATI Technologies, part of AMD.

''The FBR report is one of many financial analyst reports that speculates on changes to AMD operations. And, like the other reports I've read, its unfounded speculation,'' according to a spokeswoman for AMD.

''AMD maintains strong foundry relationships with Chartered for MPU production and TSMC for GPU and chipset production,'' the spokeswoman said. ''AMD's engagement with these foundry partners is unchanged. Chartered will continue producing AMD x86 microprocessors, augmenting AMD fab operations in Dresden with flexible capacity.''

TSMC will continue producing AMD's leading-edge graphics and chipset products and there have been no changes to the relationship, according to AMD.

Still, TSMC's overall capital spending is expected to jump 10-to-15 percent in 2008, according to FRB.

In its overall business, TSMC appears to be on a roll. "Final tally indicate that 2Q wafer shipment increased by 17-20 percent quarter-over-quarter, exceeding prior expectations of up 15-17," according to the report.

"The upside was driven by the consumer and communication, and new customers in base-band; On aggregate, communication was the strongest end market in 2Q," according to the firm. "The only area of weakness was from customers like Freescale that have exposure to Motorola, as we believe 2Q and 3Q handset shipment at Motorola have further weakened, thus adversely impacting the semiconductor companies (like Freescale) that supply into Motorola."

Going forward, TSMC's business continues to grow. "Shipment could increase by 15-17 percent [in Q3], exceeding prior expectations of up 14-16 percent," according to the firm. "PC food chain and increased outsourcing by Spansion are believed to be the areas of particular strength."

By: DocMemory
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