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TI to outsource chip production

By Stephen Shankland, CNET News, 20 May, 2002 11:10

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UltraSparc, Sun Microsystems, processor production, Outsourcing, Texas Instruments, TI

NEWS
Texas Instruments has announced plans to outsource the manufacturing of many of the chips made in its factory, but Sun Microsystems, a top customer, won't be affected by the plan. At TI's analyst conference this week, the Dallas company announced plans to shift much of its processor manufacturing to so-called foundries such as Taiwan Semiconductor Manufacturing and United Microelectronics to cut down on the massive capital costs involved in building and upgrading new factories. Merrill Lynch analyst Joe Osha said in a report that TI plans to outsource 40 to 50 percent of its manufacturing. TI's decision, though, won't impact Sun, company representatives said. TI makes Sun's UltraSparc processors, the brains inside its Unix servers. By contrast, IBM makes its own Power chips and Hewlett-Packard's PA-RISC chips, while the rest of the server companies get their chips from Intel. TI's partnership with Sun extends at least through 2004, with several new chip-manufacturing generations coming, said Julie England, vice president of TI's Sun Business Unit. "We won't be outsourcing the Sparc workflow to foundries," she said. "All Sun's (products are) made in factories owned by TI domestically." "One of the few guys who can still go it alone is Intel, but most guys have decided the best way to go is to share the burden," of building factories, said Kevin Krewell, an editor at the Microprocessor Report newsletter. Sun has dabbled with having some lower-end processors built by UMC, but Sun spokesman Martin Chorich said it plans to stick with TI. "The leading-edge processes will remain with TI," Chorich said. Sun's UltraSparc III processors, the fastest of which run at 1.05GHz, are built on a manufacturing process that has a feature size of 150 nanometres. Intel's latest processors, by contrast, are built on a 130-nanometre process, which makes it easier to squeeze more features in to a given amount of surface area. Sun has slid dramatically behind its original processor plans, a common reality in the chip world. In 1998, it announced that the UltraSparc V would be available at 1.5GHz in early 2002. As it turned out, the company has just finished introducing its new UltraSparc III-based servers. But TI still has grand UltraSparc plans extending into the future. UltraSparc III chips are carved from silicon wafers 200 millimetres in diameter. At the end of the quarter, TI will begin prototypes of UltraSparc III processors with 130-nanometre features built on 300-millimetre wafers, England said. "By the end of the year, we expect Sun to receive production-class, shippable product," she said, with higher volumes in the first quarter of 2003. Moving to 130-nanometre manufacturing will allow Sun to increase the speed of its chips, while 300-millimetre wafers will cut down the cost to produce them. About a year after that, TI will build UltraSparc processors built with even smaller 90-nanometre features. Intel plans 90-nanometre processors in 2003. Before the 90-nanometre processors arrive, though, TI will give the UltraSparcs a "kicker," a clock-speed improvement made possible by adopting a new material called a dielectric in the 130-nanometre process. TI announced at its analyst conference this week that it's prototyping a 130-nanometre UltraSparc III processor with more high-speed "cache" memory, England said. Sun is debugging those systems today, she added. TI is testing out silicon-on-insulator (SOI) technology, a speed-increasing technique used by IBM and others, but doesn't foresee an immediate need for it. "We definitely see a place for fully depleted SOI on the road map," England said. "We just believe it's beyond 2005."
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