AMD Faced with Tight Chipset Supply

It appears that TSMC's dismal yields of 40nm GPUs during 2009 are starting to have stranger and stranger effects, even now, after supply of such processors has started to improve. In AMD's case, certain tactics meant to boost its profits have now ended up backfiring, as demand for chipset grows. To be more specific, Advanced Micro Devices is being forced to deal with the inability to scrape together enough chipsets.

Though the cause may not be obvious at first glance, low 40nm yields are the main factor behind this development. Throughout 2009, Taiwan Semiconductor Manufacturing Company failed to reach a satisfactory 40nm production capacity.

This, in turn, led to an obvious shortage of 40nm-based graphics cards. This prompted graphics card makers to order more 55nm GPUs. In order to at least meet this demand, AMD decided to have TSMC shift part of its 55nm chipset capacity allocation to GPU making, in the first quarter of 2010.

This tactic was successful, at least in part, since this allowed for enough 55nm-based graphics controllers to be created and sold. All in all, sales of such products accounted for 40%-50% of AMD's total gross margin and increased profits. Now, however, with chipset demand resurrected, the reduced 55nm capacity allocation cannot keep up.

Fortunately, 40nm yields have also improved, which means that it might be possible for the Sunnyvale, California-based chip maker to have TSMC gradually return to the previous 55nm allocation. Even so, however, the shortage won't be resolved in a timely fashion.

Digitimes predicts that the chipset shortage will remain a factor until the end of the third quarter, and this may end up affecting the marketing performance of the VISION platform.

“Although TSMC's recent 40nm yields have started to see significant improvements which has helped to ease the tight supply of 55nm GPUs, the company's chipset supply has started turning tight as demand is picking up,” the report states. “The sources expect AMD's chipset shortage to persist throughout the third quarter and is unlikely to be solved before the end of September.”