China-based foundries have been fast expanding their production capacity for 28nm and more mature process technologies which could pose a threat to Taiwan Semiconductor Manufacturing Company (TSMC), said Morris Chang, chairman for the Taiwan-based foundry, at a recent company event.

In China, government incentives are encouraging local foundries to expand their 12-inch production capacity, Chang indicated. The majority of new 12-inch fab capacity in China will be 28nm or more mature technologies.

In the mature process segment, TSMC intends to offer its broad mix of technologies to support a wide range of product applications which will help the Taiwan-based company counter its competitors in China, Chang said.

Every year, TSMC uses almost one-tenth of its R&D expenses to enhance its mature process differentiation, Chang noted. TSMC has added embedded flash memory (eFlash), sensor and other features into its logic processes to enhance the company's specialty technology capability.

TSMC's 28nm technology, for example, is already offered in six process variants to meet customers' various needs. TSMC's 28nm technology has been available for six years, Chang said.

In the advanced process segment, TSMC's pure-play foundry business model will enable the company to better compete with its rivals, according to Chang. Samsung and Intel are both IDM foundries.