This is a major competitive advantage in the chip-making business, because smaller chip traces allow designers to cram more functionality into smaller spaces. You get more chips out of every silicon wafer, and these processors run cooler and on less power than the old tech.
So, you might be surprised to hear that AMD is using a 40-nanometer process for its latest graphics chips, making a jump from the 55-nanometer processor employed in most other graphics processors. Taiwan Semiconductor Manufacturing
Intel doesn't care a whole lot about the discrete graphics products market. The company is doing just fine with the low-end graphics you'll find included on many Intel-based motherboards, leaving AMD and NVIDIA
Independent reviews of the 4770 are probably provoking cold sweats at NVIDIA, though. At $99 for a fully decked-out graphics card, this thing competes very well with far more expensive NVIDIA products -- with the added bonus of running on less of the electric juice. AMD "worked very closely with TSMC throughout the transition to the 40-nanometer process," giving the chip designer a leg up on the competition.
Decoupling manufacturing from chip design has given AMD the power of choice. If the brand-new Global Foundry operation can't get the next process node into gear on schedule, well, AMD might go to TSMC or United Microelectronics
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Fool contributor Anders Bylund owns shares in TSMC and AMD, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.