Taiwan Semiconductor Manufacturing Company (TSMC) will reportedly start the production CPUs on behalf of AMD next year, using the advanced 40nm process.

The information was published on Monday on Taiwan Economic News publication. According to the report, TSMC has won foundry contracts to make central processing units for AMD, with volume production would begin at the end of the second quarter next year and run with 40-nanometer process. The unconfirmed information was revealed by "foreign institutional investors" in Taiwan, the report said.

TSMC was initially expected to start chip production using the 45nm technology, but it seems the company will proceed with the 40nm.

AMD has already contracted TSMC and United Microelectronics Corp. (UMC) to make graphic chips after merging ATI Technology, with TSMC offering manufacturing to newer chips whereas UMC offering service to its older chips.

The rumours also fire up speculations that TSMC may manufacture AMD's 40nm Fusion chips in the future, that feature x86 cores as well as GPU (graphics processing unit).