With Intel decelerating its pace of orders for baseband chips, utilization rates for TSMC's 28nm processes are set to drop slightly in the fourth quarter of 2016, according to industry sources.

A pull-in of orders for smartphone-related chips has heated up and filled TSMC's 28nm process capacity with utilization rate reaching 110% in the third quarter, said the sources. However, orders for baseband chips from Intel are slowing down which will likely drag down the foundry's 28nm utilization rate in the fourth quarter, the sources indicated.

TSMC's 28nm process utilization rate is expected to experience its first sequential fall since 2016 in the fourth quarter, the sources noted. Nevertheless, TSMC has enjoyed strong demand overall for 28nm chips since 2012, the sources said.

In addition to brisk orders for smartphones, TSMC's 28nm processes have attracted orders from major set-top box (STB) companies including Realtek Semiconductor, MStar Semiconductor and ALi, the sources indicated. China-based HiSilicon, which is contracting TSMC to make its handset chips, also has STB solutions manufactured using TSMC's 28nm process technology, the sources said.

Brisk orders for smartphone chips including related peripheral ICs, as well as STB chips, already filled TSMC's 28nm process capacity in the first half of 2016, the sources said.