AMD will repportedly outsource the production of 'Ontario' microprocessors to Taiwan Semiconductor Manufacturing Co. (TSMC) sometime in the first quarter next year, China Economic News reported today.

The news agency is citing suppliers of chip-making equipment and has not be officially confirmed by AMD and TSMC. If the report is correct,this would be AMD's first CPU contract to world`s No.1 foundry.

AMD's "Ontario" chip is part of the company's AMD Fusion family of microprocessor solutions incorporating central processing unit (CPU) and graphics processing unit (GPU) designed on 40-nanometer Bulk CMOS rule. The AMD Fusion Family of APUs or Accelerated Processing Units as AMD calls the chips that combine the CPU and GPU onto a single die, are planned for the first half of 2011. These will include a mainstream version called Llano and the Ontario, which is the low-power version. The Ontario chip will power ultra-thin notebooks and offer HD playback capabilities. The Ontario APU will be part of AMD's "Brazos" platform and it is expected to compete against Intel's offerings, the Westmere and Sandy Bridge platforms.

The report continues saying that although AMD-owned foundry, Globalfoundries, also supplies 40nm Bulk CMOS process, its capacity has been very limited since its merger with Chartered Semiconductor Manufacturing in 2008, pushing it to secure the capacity with TSMC.