Source: AMD orders Chartered chips

Contract chipmaker began producing multiprocessor chips for Intel rival this month, will begin shipping as early as July.

Contract chipmaker Chartered Semiconductor Manufacturing started making microprocessor chips for Advanced Micro Devices this month and will begin shipments as early as July, an industry source told Reuters.

United States-based AMD competes with larger rival Intel, the world's top chipmaker, in the market for microprocessors, the brains that run personal computers.

"The initial loading for AMD is about 1,000 12-inch wafers per month, on 90-nanometer technology. Chartered started production in May, and shipment is scheduled for July," an industry source familiar with the situation said Monday.

"AMD also has an option to increase the order to about 3,000 wafers per month," the source added.

A Chartered representative declined to comment. The company had previously said it would make AMD chips in mid- to late 2006 but did not give details.

On Friday, Chartered shares surged as much as 9 percent to $1.72 on the back of a 13 percent jump in AMD stock after Dell, the world's top PC maker, said it would begin using AMD's Opteron processors by the end of the year. The move marked the end of Dell's sole reliance on Intel chips for more than two decades.

On Monday afternoon, Chartered shares sank almost 5 percent to $1.60 in line with bearish market sentiment and declines in regional markets like Kuala Lumpur, Malaysia; Seoul, South Korea; and Mumbai, India. The Straits Times Index fell 3.1 percent to 2,416.73 points.

Chartered is neck and neck with China's Semiconductor Manufacturing International Corp. (SMIC) in the market for made-to-order microchips, which is dominated by larger rivals Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC).

Chartered's newest and most advanced factory, Fab 7, makes chips from 12-inch wafers--about the size of dinner plates--using cutting-edge 90-nanometer process technology.

The gap between transistors on a chip is measured in nanometers, or billionths of a meter. The smaller the gap, the more powerful the chip, as more transistors can be packed on. Such high-performance chips also command better prices.

Fab 7 has an output of about 12,000 wafers per month, and Chartered plans to increase this to about 18,000 wafers per month by the end of the year. It has a total monthly capacity of 30,000 wafers.

Other key customers for Fab 7 include technology partner IBM and communications chipmaker Broadcom. The factory also makes graphics chips for Nvidia and cell phone chips for Qualcomm and Infineon Technologies.

Chartered, in which Singapore's state investment arm, Temasek Holdings, owns 60 percent, derived about 25 percent of its revenues from 90-nanometer chips in the first quarter, compared with 28 percent in the fourth quarter.

Chartered swung to a better-than-expected net profit of $25.3 million for the March quarter, compared with a loss of $84.5 million a year ago, on robust demand for consumer gadgets.

But it forecast flat to 3 percent higher revenues in the second quarter, to June from the previous quarter, and lower net profit of $11 million to $21 million as video game console sales slowed.

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