Chartered Semiconductor, a contract maker of semiconductors which fabrication process is aligned with Advanced Micro Devices and IBM, has started to produce chips for AMD, a news agency reported. The first shipments are scheduled for July, but the initial shipments will not boost AMD’s production capacity significantly.

“The initial loading for AMD is about 1000 12” wafers per month, on 90nm technology. Chartered started production in May, and shipment is scheduled for July,” an industry source familiar with the situation told Reuters news agency, adding that “AMD also has an option to increase the order to about 3000 wafers per month”.

Currently AMD produces about 30 thousand 200mm wafers per month on its Fab 30 and has also initiated shipments of chips produced at its Fab 36, which current capacity remains unknown. Provided that the yields are identical, 1 thousand of 300mm (12”) wafers provides the same amount of microprocessors as 2.25 thousand of 200mm wafers, which means that AMD’s production capacity may be boosted by high as 7.5% (real figure will be lower, as Fab 36 capacities were not counted).

But while 7.5% does not sound as a too substantial increase in availability, this will still help AMD to sell more of its chips, which were in tight supply in the past due to high demand. Additionally, as the Fab 36 ramps up and AMD’s orders to Chartered increase, the company will be able to ship significantly higher amount of microprocessors as compared to its abilities today. Recently the company reconfirmed its plans to ship two times more processors in 2008 than it did in 2005.

“The increased capacity provided by Fab 36 will contribute to our goal of doubling total production output from 2005 through 2008. We are positioned better than ever to serve our customers long-term needs and achieve our aggressive growth objectives,” said Dirk Meyer, president and chief operating officer at AMD.

In November, 2004, AMD and Chartered Semiconductor Manufacturing announced they had entered into sourcing and manufacturing technology agreements whereby Chartered will implement under license portions of AMD’s Automated Precision Manufacturing (APM) software suite and become an additional manufacturing source of AMD64 microprocessors. Earlier it was reported based on unofficial claims that Chartered would supply first batch of processors to AMD in June 2006.

Neither AMD, nor Chartered commented on the news-story.