Nvidia anticipates graphics recovery for 2003

The graphics-chip maker is upping production of GeForce FX processors in anticipation that new technology and new games will spur demand

Graphics chip maker Nvidia and Taiwan Semiconductor Manufacturing Co. (TSMC), the largest contract chip manufacturer, on Monday unveiled TSMC's first chips built on a new manufacturing process, and predicted a sales recovery for 2003.

At a public event that was reported by several Chinese and Taiwanese newspapers, the two companies showed off Nvidia's GeForce FX, manufactured using TSMC's 0.13-micron process. The chip marks the dawn of the 0.13-micron era for graphics chips, joining PC processors, which have been using the process for a few months already.

Nvidia said that the more advanced hardware, combined with new high-level programming languages such as Nvidia's own Cg and new game software would spur users to buy new PCs in 2003. Industry analysts said that Nvidia is already placing larger orders for the new year, following reduced orders in mid-2002.

Besides powering desktop computers and notebooks, Nvidia's chips are used in Microsoft's Xbox video game console, which some analysts say has been selling more slowly than expected.

The fortunes of Nvidia, which takes in $1.8bn (about £1bn) in annual sales, has a significant impact on TSMC's bottom line. Because of increased orders due to the GeForce FX launch, for example, TSMC said it expects its revenues for the year to reach $5bn, up from $3.6bn last year.

The graphics chip maker expects that corporate demand will also be up, and said it will soon launch chips for workstations and notebooks based on the NV30, the code name for GeForce FX. The company's share of the notebook graphics chip market grew from 10 percent in the first quarter to 25 percent in the third quarter, according to Huang Jen-hsun, president and chief executive of Nvidia

The 0.13-micron process is an important breakthrough for TSMC, allowing it to squeeze more transistors onto a chip. Shrinking the chip geometry increases efficiency, reduces manufacturing costs and generally decreases power consumption and heat emissions. The number refers to the general size of chip features such as transistors and interconnects. TSMC's main competitor in Taiwan, UMC, also has a 0.13-micron process in the works.

Nvidia rival ATI uses TSMC's 0.15-micron process for its Radeon 9700 and other high-end graphics chips, and is expected to switch to the company's 0.13-micron process for an updated version of the Radeon 9700, to begin volume production by the end of this month. Both the revised Radeon chip and the GeForce FX will be available through retail outlets in several weeks' time.

The GeForce FX was delayed by several months, missing the Christmas shopping season, while TSMC put the finishing touches on its 0.13-micron manufacturing process.

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