TSMC is causing some serious issues for Nvidia and partially for ATI. Nvidia planned to move most of its chips from 55nm to 40nm as soon as 40nm is available, but it looks that TSMC cannot meet its schedules.
The 40nm production of graphics wafers was scheduled for early 2009, and now it's pushed back at least a few months. Nvidia wanted to try to be the first with 40nm chips and finally beam the story where ATI is always the first to transition to a new process.
This delay will affect Nvidia more than ATI as with 55nm products, especially in entry level and mainstream ATI holds the price / performance crown and it doesn't really have to rush to a new process. On the other hand, if Nvidia wants the performance crown back, it has to go to 40nm and try to make new and smart chips as soon as possible.
We can confirm that both Nvidia and ATI are shrinking from 55nm to 40 nm as this is the right step and 2009 might be remembered as graphics chip transistors might be smaller than the 45nm that will be used in 2009 for CPUs. This won’t last long, as in late 2009 Intel plans to launch some 32nm chips; but this is only if it can meet its own schedules.