Nvidia to Increase Foundry Outsourcing to TSMC and UMC

Taipei, May 19, 2008 (CENS)--To keep up with strong demand for its graphics chips, Nvidia Corp. will increase outsourcing to silicon foundries Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Crop. (UMC).

Chip-making equipment suppliers pointed out that throughout last quarter Nvidia had contracted TSMC to make a record 50,000 wafers of 65nm chips and UMC to make 7,000-9,000 wafers of similar chips. Although Nvidia has scaled down contract volume of G80 chips by 3-5% as part of its effort to work off overstock, the company has increased foundry contracts of its G92B, G94 and G96 chips. Accordingly, industry watchers forecast contract volume to TSMC would surge to 60,000 wafers and the volume to UMC to rise to 10,000-12,000 wafers next quarter.

Throughout the quarter to April this year, Nvidia had revenue of US$1.1 billion, soaring 37% from US$844 million it had the same period of last year. Although the company saw its gross margin drop 44.6% in the meantime because of choppy product-line crossover, the recession pace was lower than expected 46% and its earnings were 34% higher than the same period of last year.

The company's executives pointed out that the company shipped 42% more chips last quarter than the same period of last year, the highest quarterly growth in its history. They estimated the company's shipments to grow at double-digit rate next quarter from past records, which show third quarter is normally a peak season that usually drives up the company's shipment to grow at double-digit pace.

Industry watchers estimated Nvidia to ship at least 30 million chips last quarter from its revenue report and believed the company would not have much difficulty making the goal of delivering 100 million chips throughout this year.

Nvidia estimated revenue for the quarter to July this year would slip 5% from a quarter earlier because of traditional slacken season and Intel's June rollout of Montevina platform for notebook computers, which is expected to push procurement sentiment in computer market backwards.

In competition against Intel in Mobile Internet Device (MID) market, Nvidia has decided to side with VIA by supporting its Isaiah microprocessors.