United Microelectronics' (UMC) recently-opened 12-inch wafer fab in Xiamen, China has obtained 40nm chip orders from MediaTek and Spreadtrum Communications, according to industry sources.

MediaTek and Spreadtrum are also looking to extend their contracts with UMC's Xiamen fab to 28nm manufacturing, as the Taiwan-based foundry's 28nm node is already mature and complete, the sources indicated.

Earlier in 2017, UMC disclosed its transfer of 28nm process technology to subsidiary United Semiconductor (Xiamen) had been approved by the Investment Commission of Taiwan's Ministry of Economic Affairs. United Semi will be ready for 28nm chip production in the second quarter of 2017 and will seek orders from China's local handset chip suppliers, according to the Taiwan-based pure-play foundry.

In contrast, China-based Semiconductor Manufacturing International (SMIC) still has poor yield rates on its 28nm HKMG process, the sources identified. In fact, HiSilicon Technologies has been being encouraged by the China government to contract SMIC and other local foundries to manufacture its 28nm mobile chips, but the foundry's low yield rates has prompted HiSilicon to look for alternatives such as UMC Semi, the sources said.

SMIC's 28nm process technology accounted for only 3.5% of its total wafer sales in the fourth quarter of 2016. SMIC has remarked the proportion is expected to reach nearly 10% by the end of 2017.

Meanwhile, Shanghai Huali Microelectronics (HLMC) is making slow progress in its joint development of 28nm process technology with MediaTek, according to industry sources. The China-based foundry's volume production of 28nm chips for MediaTek is still not ready.

In addition, Taiwan Semiconductor Manufacturing Company (TSMC) is gearing up to open its new 12-inch plant in Nanjing, China in 2018. The facility will directly enter 16nm FinFET chip production with target capacity of 20,000 wafers a month.