Taiwan Semiconductor Manufacturing Company will reportedly produce central processing units for Advanced Micro Devices starting mid-2009. Rumours about possible pact between AMD and TSMC have been around for many quarters now, but the officials from the companies have never commented on the matter.

Citing “foreign institutional investors”, China Economic News Service reported that AMD and TSMC had reached an agreement under which the latter would produce CPUs for the former using 40nm process technology starting Q2 2009. No details were released and it is unclear whether TSMC plans to produce typical microprocessors for AMD or will make code-named Fusion chips that feature x86 cores as well as graphics processing unit.

Back in mid-2007 the world’s top contract semiconductor manufacturer confirmed that it plans to start making CPUs, but did not disclose name of its customers. It was especially emphasized that manufacturing of microprocessors requires technologies that are “more demanding than what TSMC has been used to dealing with”, which indicates that TSMC is talking about leading-edge chips, not relatively simplistic special-purpose products made using bulk process technology. The chief executive of TSMC indicated that his company has to allocate more resources in high-k, metal gate-related technologies in order to ensure high performance and low-leakage in CPUs.

It was originally expected that TSMC will start microprocessor production using 45nm process technologies, but current rumours point to a plan of using so-called optical shrink of the fabrication process: 40nm.

Some analysts believe that AMD is about to spin off its fabs into an independent company, which will eventually allow the company to choose manufacturing partners for its products that offer lowest possible pricing.

Tags: AMD, TSMC, 45nm, 40nm