A Chinese-language news-paper reported citing a report from Goldman Sachs investment firm that Advanced Micro Devices may outsource production of its chips that combine functionality of general purpose and graphics processing units known as Fusion. The reasons behind the move remain unclear.

A report at Chinese-language Economic Daily News citing Goldman Sachs, which was partly translated into English by DigiTimes web-site, said that AMD is designing two versions of its Fusion processors. One version is said to be manufactured by AMD itself using silicon-on-insulator process technology, whereas the other one may be made by former-ATI’s (now AMD’s graphics product group) main foundry partner, Taiwan Semiconductor Manufacturing Company (TSMC), using bulk fabrication process.

AMD already produces Geode-series processors at TSMC and some of those chips have built-in graphics core. The products, however, have nothing to do with the Fusion project, even though both approaches have similarities.

While AMD’s aim with Fusion – to deliver a chip that can process both general-purpose data and render graphics – is clear, hardly anyone outside the company knows the details of particular implementation of its first version. For instance, it is unclear whether the company has plans to deliver a monolithic chip, or intends to create a solution that contains two dice on a single slice of substrate.

Usually semiconductor companies have so-called implementation teams, which prepare products for mass production. Given that the deal between AMD and ATI was closed in late-October 2006, it is unlikely that micro-architectural peculiarities of the Fusion products have already been finalized and implementation teams started to work in certain directions.

AMD publicly stated that it would use 45nm process technology to manufacture commercial Fusion processors in early 2009, whereas sources close to ATI said that the company will use TSMC’s 45nm process technology for graphics chips in 2008.

It is still under review what kind of 45nm process technology AMD will use along with its chips. On the one hand, AMD might develop a version of its silicon-on-insulator (SOI) fabrication process to ramp up 45nm chips quickly. On the other hand, AMD and IBM already announced that they “expected” to make commercial products using technology that features immersion lithography and ultra-low-K interconnect dielectrics in 2008. In addition, AMD and IBM developed 45nm process technology with high-K dielectrics.

Officials for AMD did not comment on the news-story.