> Nvidia lowers second-quarter gross-margin call
> By Mark LaPedus
> EE Times
> July 31, 2003 (10:14 a.m. ET)
>
> Santa Clara, Calif. - Graphics processor supplier Nvidia Corp. last
> week lowered its gross-margin expectations for the second quarter
> ended July 27. The company said it would meet its previously stated
> sales forecast of approximately $455 million to $460 million for the
> quarter. Those results are to be announced on Thursday.
>
> Nvidia said its gross margins for the second quarter are expected to
> be slightly lower than the company's original guidance. "This was a
> result of higher-than-anticipated product costs attributed to
> 0.13-micron semiconductor process technology," the company said.
>
> While fabless Nvidia did not identify its foundry partners, its chips
> are mainly produced by Taiwan Semiconductor Manufacturing Co. (TSMC)
> and IBM Corp.'s Microelectronics Division.
>
> In March, IBM scored a major coup in the silicon foundry business when
> it announced a multiyear alliance with Nvidia. Under terms of their
> agreement, IBM will make Nvidia's next-generation GeForce graphics
> processor line in its 0.13-micron technology.
>
> TSMC is expected to process 95 percent of Nvidia's wafers in 2003,
> according to a report from investment-banking firm Pacific Crest
> Securities Inc. (Portland, Ore.). IBM Microelectronics will make the
> company's higher-end chips, analysts say.
>
> The shift toward 0.13-micron technology has been a challenge for many
> chip makers and foundries, prompting Semico Research Corp. to lower
> its 2003 forecast.
>
> Chuck Byers, TSMC's head of branding, claimed in a recent interview
> that the company's 0.13-micron technology is superior to IBM's
> process. But sources said TSMC's 0.13-micron yields actually range
> anywhere from 40 percent to 70 percent, depending on the product line.
>
> Meanwhile, IBM's foundry unit has been hurt by a "slow improvement in
> yields" at 0.13-micron technologies, according to SG Cowen Securities
> Corp.
