ATI recently unveiled the chip industry`s first graphics chip designed on 80-nanometer process and built by the No.1 foundry Taiwan Semiconductor Manufacturing Co. (TSMC). ATI`s rival Nvidia will roll out its 80nm chip in November, with TSMC also being the contact supplier.

Thanks to the contracts from the world`s top two graphics-chip suppliers, TSMC expects its capacity utilization at its leading-edge process to go up in the fourth quarter.

ATI debuted its 80nm chip, dubbed the X1950 Pro, on Oct. 18, with the chip developed to support Microsoft`s Vista operating software. A second 80nm product in the form of the RV560 Radeon X1650XT is expected to arrive before the end of the month.

The 80nm cooperation between ATI and TSMC also quelled speculations that ATI might divert TSMC-bounded orders toward Advanced Micro Devices (AMD) after AMD recently acquired ATI. TSMC executives stressed that TSMC and ATI had been working together on development of the cutting-edge processes since the 0.18-micron era and TSMC has been ATI`s loyal partner.

According to TSMC`s annual report, ATI was the only contract buyer to contribute over 10% of TSMC`s revenues last year. The graphics-chip vendor began shrinking its circuit geometry to 80nm in the third quarter of this year, in preparation for the next-generation chips (65nm).