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Taiwan Semiconductor Manufacturing Company has reportedly given Nvidia Corp. and Qualcomm priorities in 28nm capacity allocation. As a result, tight supply situation with their latest chips should get easier in approximately one quarter from now.

Qualcomm has officially stated that it started to work with TSMC rivals to manufacture its system-on-chip and baseband processors for mobile devices using 28nm low-power process technology. The company said that the demand for its latest Snapdragon S4 application processors was so high that TSMC was unable to manufacture enough chips. Qualcomm confirmed that it initiated working with its other partners among contract makers of semiconductors to manufacture the Snapdragon S4 and potentially S5 products at their capacities. Since that required significant redesign of chips as well as creation of new masks, validation and a lot of other actions, the company will have to spend additional OpEx [operating expenditure] money to enable second or third sources for 28nm products.

Nvidia Corp. also blamed TSMC for inability to supply enough chips made using 28nm high-performance process technology and also noted lower-than-expected yield issues. Rumour has it that Nvidia has also started negotiations with Globalfoundries and Samsung Semiconductor  to manufacture its chips at their capacities.

It is believed that both Nvidia and Qualcomm suffer from TSMC's slow ramp of 28nm manufacturing processes that utilize high-k metal gate (HKMG) technology.

According to a market rumour reported by DigiTimes web-site, the world's largest maker of semiconductor decided to provide priorities to Nvidia and Qualcomm, which will result in higher allocation of production capacities and faster manufacturing, testing and packaging procedures. At present it is unclear whether TSMC will reduce volumes it ships to other companies, such as Advanced Micro Devices, or will delay manufacturing for semiconductor designers that planned to begin production of their 28nm chips only now.

TSMC, Nvidia and Qualcomm did not comment on the news-story.

Tags: TSMC, Qualcomm, Nvidia, Snapdragon, Geforce, Kepler, Fermi, 28nm, GK104, GK107, Semiconductor

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