During a conference call with analysts, Rick Tsai, the president and chief executive of TSMC, admited that the company had some yield issues with its new 40nm processing.

TSMC rolled out 40nm manufacturing process last year, and the 40nm technology represented about 1% of its overall sales, which was better than expected. In Q2, TSMC expects to have 2 percent of its overall sales in 40nm arena.

When asked about the yield problems with 40nm processing, Tsai said, “there have been difficulties with the yields. 40nm is a difficult technology to manufacturer. We understand the root of the problem”. However, Tsai didn’t mention how the company would fix this problem.

Tsai also indicated that TSMC had demonstrated a functional SRAM cell, based on its upcoming 28nm processing, which includes high-k and metal gates for the gate stack. TSMC is expected to move into 28nm production in the first part of 2010. You may read more here.