Sun switches to TSMC to make its chips

Taiwan Semiconductor Manufacturing Corp., the world' largest chip foundry, will start making microprocessors for Sun Microsystems, a big change for both companies.

Sun has employed Texas Instruments for years to make its chips. TI, however, is ramping down a its foundry work. TI makes most of its money by producing chips for the cell phone market, where cost is often more important than cutting edge manufacturing technology. As a result, TI has signaled it won't race ahead with companies like Intel and Advanced Micro Devices to be the first (or one of the first) to graduate to an advanced manufacturing process.

In the server market, however, chip makers need to graduate rapidly to the latest in manufacturing because advances in manufacturing typically result in performance gains.

TSMC will start making chips for Sun on the 45-nanometer process, said Fadi Azhari, Director of Marketing for SPARC CMT Technology. Sun's best microprocessors are made on the 60-nanometer process. (The number refers to the average feature size on a chip. A nanometer is a billionth of a meter.). Sun did not state when it will start coming out with 45-nanometer chips. Intel already sells 45-nanometer chips.

And for TSMC, it's a victory too. Although the Taiwanese company makes a huge variety of chips, it has not made advanced, complex PC and server processors to date. TSMC, in fact, is one of the few large chipmakers that has not participated in an effort to make a clone of an Intel chip. (TSMC, however, has produced several networking chips for Intel.)