Fujitsu taps TSMC for advanced 28nm chip production

Japanese chip maker Fujitsu Microelectronics will outsource production of advanced 28-nanometer chips to Taiwan Semiconductor Manufacturing (TSMC), becoming one of the first companies globally to announce such a deal.

Initial shipments of the 28nm chips will begin around the end of 2010, the two companies said in a statement on Thursday.

The 28-nanometer manufacturing technology is important to keep up with user demands for small mobile devices with multiple capabilities. Chips are the foundation of every electronic device and many gadgets require multiple chips, such as a processor for calculations and a memory chip for storage. Advances in chip production enable companies to create smaller, more power-efficient chips able to fit inside smartphones and other small gadgets while reducing drain on batteries.

The deal with Fujitsu extends the work between the two companies. Fujitsu previously tapped TSMC for 40nm chip production and already has several chip designs in progress at the 40nm level, the company said in a statement. Chip makers such as TSMC and Intel currently mass produce chips using 40nm to 45nm technology.

The agreement also helps TSMC by validating its new 28nm production process with a customer win. Early agreements also constitute an important part of research and technology development because companies such as Fujitsu usually work with TSMC and pay more to help cover R&D expenses because they want to take advantage of the new chip manufacturing technology as quickly as possible.

Part of their agreement stipulates Fujitsu will jointly develop an optimized 28nm high performance process technology with TSMC. The two companies are also discussing possible further collaboration on advanced chip packaging including high-performance lead-free packaging.

TSMC is the world's largest contract chip maker, and dozens of chip vendors, including Texas Instruments, Qualcomm and Advanced Micro Devices (AMD) depend on its production technology innovations to enable them to create cutting edge chips.