Advanced Micro Devices, the world’s second largest supplier of x86 microprocessors, may outsource at least some central processing unit (CPU) production to Taiwan Semiconductor Manufacturing Co. (TSMC) next year, an analyst from FBR Group said in a not to clients. If the information is correct, this would represent a substantial change in the company’s chip development.

In a research note, FBR said that TSMC may boost its capital spending after “winning high-end CPU biz from AMD”, reports EETimes web-site. Under the plan, TSMC would make 45nm processors on a foundry basis for AMD, with “volume ramp” in the second quarter 2008.

AMD is currently making part of its microprocessors at Chartered Semiconductor, whereas the absolute majority of the company’s chips are manufactured in Dresden, Germany based fabs. However, after the company cut its capital spending, the chipmaker may be looking for a partner capable of producing a variety of products using advanced process technology at low cost.

It should be kept in mind that making of state-of-the-art chips requires state-of-the-art manufacturing processes and bulk technologies developed by companies like Taiwan Semiconductor Manufacturing Company (TSMC) may not allow AMD to create truly competitive high-performance products. Nevertheless, AMD may product certain low-end/embedded offerings at production capacities of TSMC.

“AMD maintains strong foundry relationships with Chartered for MPU production and TSMC for GPU and chipset production. 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,” an AMD spokeswoman is reported to have said.