TSMC's design affiliate, Global Unichip Corp (GUC), is looking to a relaxation of the rules governing its participation in the mainland China IC design market for an increase in the already 'extraordinary' growth it has achieved in China.

'GUC anticipates that the Taiwanese government can further loosen the regulations of IC design company operations in China in the near future', says the company.

This relaxation will, the company hopes, allow GUC to compete with mainland Chinese chip design companies on a level playing field in bidding for business in the mainland market.

Although the China market only accounted for 6% of GUC's H109 revenues, the company says: 'The growth momentum of this market was extraordinary'.

GUC had an 8% increase in revenues for Q2 over Q1. GUC's revenues for Q209 were $62m compared to Q1's $58m. In Q208 revenues were $70m.

In H109, GUC's revenues were $120m for an operating profit of $6.3m and a net profit of $6.5m.

Total revenues from nanometer (i.e. sub-0.10 micron) projects grew to 30% with 81% of NRE revenues coming from nanometer projects with 90nm projects representing 23% of the total NRE revenue.

65nm projects grew to 55% of revenues, and 40nm projects represented 3%. 0.13 micron projects were the major contributor to turnkey revenue, representing 62% of total turnkey revenue in H109.

65nm project turnkey revenue started to kick-in and represented 8% of the turnkey revenue of H109.

Communication applications accounted for 60% of H109 revenues, while consumer electronics accounted for 35%. The major product applications include networking, GPS, mobile TV, video recorder, surveillance systems, and WiMax.

North America and Japan serve as the main customer base, generating 67% and 17% of revenue, respectively. Taiwan, Europe and Korea represent 4%, 4% and 2%, respectively, of the revenue.

GUC anticipates revenue growing 'at a moderate pace' for the next half of the year.

GUC was founded in 1998 and was one of a group of about 15 Taiwanese design houses which then worked with TSMC. In 2003, TSMC decided that the differing aims and agenda of the various houses made it difficult to work with them all, and decided to work just with GUC. So, that year, TSMC took a 49% share in GUC which was subsequently reduced to the 36% stake it holds today.

Dr F.C. Tseng, former CEO of TSMC, and currently TSMC vice chairman, is the chairman of GUC,

It has been expected that the foundries would move into design, and GUC appears to be TSMC's route into accomplishing that, without providing design services directly under the TSMC name which could be construed as competing with its IDM customers.

GUC charges an up-front NRE. For a 50m gate 65nm chip with minimal IP requirement and including tooling and mask charges this would be between $5m and $10m.

If a chip needs a re-spin, then a customer may get a free re-spin in certain circumstances. If the fault is caused by faulty design by the customer, then the customer pays for the re-spin, but, if it is caused by a fault in GUC-supplied IP, or a fault in the manufacturing process, then GUC or TSMC will pay for the re-spin.