With Taiwan Semiconductor Manufacturing Company (TSMC) not being able to improve yield rates on its 80nm manufacturing process, ATI Technologies will forego manufacturing its graphics chips on 80nm node this year, according to industry sources.

TSMC declined to comment on the report, citing customer confidentially, while ATI stated that its migration schedule to 80nm for 2006 has not changed, and it still plans to begin manufacturing on 65nm process technology in 2007.

The sources indicated that ATI originally planned to produce its graphics chips (RV560, RV570, RV505 and RV535) scheduled for release in the third quarter of this year using 80nm process technology. However, due to TSMC not being able to improve its yield rates, ATI will use 90nm node to manufacture the mid-range RV560 and RV570 chips

The sources did not indicate the manufacturing process ATI will use for the entry-level RV505 and RV535 chips, according to the Digitimes.com website.

Citing industry sources, the Taiwanese website reports that ATI had also originally planned to produce its Radeon x1900 chips on a 80nm process, but due to yield issues, the chipmaker chose to manufacture on 90nm node, the sources added.