ATI Technologies reportedly plans to increase its orders of wafers at Taiwan Semiconductor Manufacturing Corporation and United Microelectronics Corporation this year in an attempt to fulfil the demand on its products throughout the year, its CEO noted in an interview.

These days ATI makes its RADEON 9xxx-series of graphics chips at TSMC using 0.15 and 0.13 micron fabrication process and also manufactures RADEON 9200 GPUs at UMC using 0.15 micron node. The company also sells TV-tuner, communication, DSP and other chips intended for consumer electronics, though, I do not know where exactly the parts are manufactured. Keeping in mind that ATI is one of the largest clients of TSMC, there is a high possibility that these chips are also made at the number one Taiwanese foundry.

Currently it is not known what products will be made in higher quantities later this year as well as it is not clear whether the CEO mentioned the calendar year or ATI’s fiscal year that ends in August.

ATI’s officials said during the second quarter conference call that the company expects its revenues for the third and the fourth quarters of fiscal 2003 to be in the range of 300 million (see this news-story), not significantly more compared to the second quarter. Although the company performs substantially better than a year ago, it is really hard to explain “significantly more” orders on chips amid flat sales growth and current market conditions.

ATI’s inventory level for March 21^st was $131.3 million and represented 53 days of sales, according to analysts. Both ATI and NVIDIA try to keep their inventories on low-level, so, it is hardly possible that a company plans to increase orders on semiconductors without getting more orders from its clients.

Keeping in mind that ATI expected to land more orders on its consumer electronics devices in the fourth quarter of its fiscal 2003, I believe that those chips will allocate a very large share of increased orders. Moreover, in the second half of the year ATI will also launch its chipsets for mainboards, what will also require the company to allocate more manufacturing facilities. Finally, given that the R300-based family of solutions is to stay for at least one more quarter, with the ramp of the RADEON 9600 and the 9800 families of products we may expect additional orders to be placed at TSMC.

Since the demand on personal computer hardware usually upticks in the third and the fourth calendar quarters, it seems that ATI’s extra-orders will be placed in Summer, while the actual products will appear massively during the Fall and affecting ATI’s revenues in the first quarter of fiscal 2004.

All-in-all, ATI is very likely to produce more chips this calendar year, though, we will only see the substantial ramp in the second half, but not now.