Chip yields at TSMC low and yet more relevant than before

Aug 14, 2012 07:03 GMT  ·  By

NVIDIA's most recent conference call with financial analysts took place a few days ago, but we will only speak about one of the highlights: supply of 28HP chips.

For those who don't know, 28HP is the abbreviation for 28nm high-performance manufacturing technology with high-K metal gate.

It is the technology that Taiwan Semiconductor Manufacturing Company (TSMC) uses in the making of graphics processing units (GPUs) for Advanced Micro Devices (AMD) and NVIDIA, as well as SoCs (system-on-chip devices) for Qualcomm.

Those hoping that NVIDIA had good news on this front will be disappointed. Kepler GPU inventories (GTX 680/680M, 670/670M, etc.) did not suddenly soar during the past quarter, though inventories aren't as tight as before.

TSMC admitted that it wouldn't be able to meet 28nm demand this calendar year (2012). Even with a 70% increase in output in Q2, manufacturing capacity is still insufficient.

There is another matter at play here: TSMC is no longer shipping functional chips to its partners, but entire wafers.

That means that each shipment received by NVIDIA, and AMD and Qualcomm for that matter, includes many processors with faults, only some of which can be salvaged and utilized in lower-end graphics cards.

"We are expecting to be supply constrained throughout this quarter and then we will report on that in Q4. Obviously, this is a combination of allocation, yield and the market demand, so there are a lot of variables. So far market demand seems very strong and we are selling into a marketplace with quite a bit of pent-up demand for Kepler," said Jen-Hsun Huang, chief executive officer of Nvidia Corp., during the aforementioned recent conference call with financial analysts.

"When we started going into wafer buying, our margins are now very affected by improving yields. It is a very large lever and if there is anything that we can do to improve yields, it should be all hands on deck. There is just a lot more room to improve 28nm yield to the 40nm level."