In addition to TI's difficulties, Sun has had problems of its own as well with the chip design. Because of a problem the chip could have in rare circumstances, Sun distributed a repair that diminishes the chip's mathematical calculation speed about 5 percent. The shift in strategy comes as UMC struggles to boost profit amid slumping orders and prices. UMC now makes chips, based on customer designs, used to store information and to drive applications in computers, phones and toys. In December, UMC said it had developed a manufacturing process with IBM and Infineon Technologies to build faster and more complicated chips such as processors.
Processors contain millions of transistors interconnected with aluminum or copper on a single chip.
UMC's new process allows more circuitry to be packed onto a chip. That increases computer speed and reduces cost. Its high profit margin would help UMC maintain its margins, especially after they fell quite steeply in the first quarter. Taiwan Semiconductor Manufacturing Co., UMC's larger rival, is also starting to make processors. TSMC declined to comment on a media report that it received an order last November to make processors for Transmeta.