GPU Shortage to Persist Until May

Taiwan Semiconductor Manufacturing Company has definitely not been at its highest over the past months, having been constantly faced with the inability to keep up with demand for 40nm-based products. Recently, rumors started indicating that the final issues with the 40nm manufacturing process should be resolved soon, around the same time as NVIDIA plans to ramp up Fermi production. This, however, may not come as soon as end-users might hope, even though TSMC promised to double yields by the end of the year.

According to one of the latest reports published by Digitimes, TSMC has, indeed, managed to get over a part of the issues related to its 40nm manufacturing process but is still a way off from solving all of them. While the company managed to reduce its defect density of 40nm technology, from 0.3-0.4 per square inch to 0.1-0.3, all the remaining problems are unlikely to be sorted out for a few months. This means that all graphics cards based on 40nm, such as AMD-based DirectX 11 adapters and NVIDIA's Fermi cards, will still be faced with inventory constraints.

Of course, this shortage will extend to all the hardware makers that build and sell such graphics adapters. This includes Micro-Star International (MSI), Asustek Computer (ASUS), Tul (owner of PowerColor and VTX3D) and Gigabyte, among others. These companies will have to somehow maintain their gross margins even now that GPU and DRAM costs are rising because of shortages. As such, companies might actually decide on rising their product's prices by 5% to 10%.

Currently, TSMC's 40nm manufacturing process isn't expected to catch up with market demand before May. Still, the company hopes to reach yields of 160,000 wafers per quarter by the end of 2010, which means that prices might fall back down during the third and fourth quarters.