TSMC says to use 28nm chips by early 2010

TAIPEI (Reuters) - TSMC (2330.TW) (TSM.N), the world's biggest contract chip maker, said on Tuesday it would start using advanced 28-nanometer technology in early 2010 to produce chips used in new, higher-performance tech gadgets.

In a highly competitive foundry market, Taiwan Semiconductor Manufacturing Co Ltd (TSMC), United Microelectronics Corp (UMC) (2303.TW) (UMC.N) and other smaller rivals are racing to develop new process technology for chip production.

"Product differentiation, faster time-to-market and investment optimization are the three most important values TSMC delivers to our customers," Jason Chen, a TSMC vice president, said in a statement.

"In support of these values, we are developing this comprehensive 28nm technology family so that it offers choices, depending on the customer applications and performance requirements."

The new technology, which will support applications like cellular baseband and wireless connectivity, is expected to provide up to 50 percent more speed or 30-50 percent lower power consumption than TSMCs' 40-nanometre low-power node, TSMC said.

TSMC, which counts Texas Instruments (TXN.N) and Nvidia (NVDA.O) among its major clients, has been driving process technology to advanced 90-, 65- and 45-nanometer as next-generation electronics devices such as mobile phones and game consoles require more powerful processors.

The smaller circuitry allows the design of more powerful chips for more complex devices, and the squeezing of more circuits onto a single chip also increases chip yield per wafer, boosting efficiency.

At 0217 GMT, TSMC's Taipei-listed shares fell 5.2 percent and UMC shares shed 6.8 percent, while the main TAIEX slid 6.2 percent following a tumble on Wall Street.

(US$1=T$32.2)

(Reporting by Baker Li, Editing by Jonathan Hopfner)