The last AMD roadmap we saw described Ontario, a 32-nm "accelerated processing unit" with two cores, 1MB of cache, support for DDR3 memory, and a built-in graphics processor. We haven't heard much about this future product since then, but today, Fudzilla claims AMD now intends to build that product on a 40-nm bulk silicon process.
Using that type of process might allow AMD to more easily integrate a GPU into the same die as the processor. However, since current AMD CPUs use silicon-on-insulator technology, a retooling of the processor design would also be in order.
Fudzilla says that's also on the menu. AMD will reportedly base Ontario on its next-generation Bobcat processor architecture, the low-power sidekick of Bulldozer. We first heard about Bobcat way back in July 2007; back then, AMD talked of a processor designed from the ground up for "mobile, ultra-mobile and consumer electronics" and tweaked to "scale as low as 1 watt."
Intel's Atom CPU also fits that description—and as you might recall, Intel recently partnered up with TSMC to port the processor to a bulk silicon process. Fudzilla's story therefore doesn't sound all that unbelievable. It doesn't answer the question of whose bulk 40-nm process AMD will choose, though. TSMC already fabs AMD's graphics processors, and GlobalFoundries was recently chosen by STMicroelectronics for the production of unannounced devices.