ATI, graphics products group of Advanced Micro Devices, may be preparing a rather substantial update for its mainstream lineup of graphics processing units (GPUs) in late Q1 2009 or early Q2 2009, according to media reports. The new code-named RV740 chip is projected to be made using 40nm process technology at Taiwan Semiconductor Manufacturing Co.

According to an article Taiwan-based Commercial Times news-paper (excepts from the article were party translated by DigiTimes web-site), ATI has already taped out its first 40nm GPU code-named RV740, which means that AMD’s GPG has submitted documentation needed to start manufacturing to TSMC. It is now projected that the world’s largest contract maker of semiconductors will start production of the ATI RV740 chips by the end of the first quarter next year, which will allow AMD to update its lineup of graphics chips either very late in Q1 or sometime in Q2.

It is necessary to note that exact technical specifications of ATI RV740 are unknown at this time. Some observers believe that the RV740 is a version of RV730 (ATI Radeon HD 4670) with two times more - 640 – stream processors, 32 texture units and 16 render back ends, but produced using 40nm process technology. The RV740-based graphics cards are expected to feature GDDR5 memory.

Such a chip would be very powerful and, provided that the yields at 40nm node are high enough, very inexpensive to manufacture. However, previously ATI’s x40 code-names usually meant new process technology, but not improved performance. Therefore, it would be a surprise if ATI decided to improve speed and utilize new fabrication process with the RV740.

Officials for AMD’s graphics products group did not comment on the news-story.