Foundry chipmakers plan to use part of their 28nm production equipment for the manufacture of 20nm chips, as they are aware of a potential oversupply of 28nm chips, according to industry sources.

　　Allocating a portion of 28nm production tools for 20nm chip production will also help foundries to satisfy immediately customers' technology transition needs, said the sources. Meanwhile, part of 20nm equipment could be used for the manufacture of more advanced 16/14nm chips to avoid idle equipment and production, the sources indicated.

　　Globalfoundries and Samsung Electronics have joined TSMC ramping up their 28nm production capacities. As the global output of 28nm chips scales up significantly, demand might not be able to catch up with supply, the sources pointed out.

　　Demand for 28nm chips has slowed down since the second half of 2013, due to disappointing sales of smartphones particularly in the high end.

　　In addition, fabless IC firms have signed contracts with their second-source suppliers, which provide more attractive prices than TSMC's, the sources said. Samsung, for instance, has grabbed a portion of Qualcomm's 28nm chip orders, the sources revealed.

　　Samsung reportedly will also manufacture 28nm chips for Apple's upcoming iPhone 5S. However, Apple will start using other foundries' 20/16nm technologies for the manufacture of its next-generation processors in 2014. As a result, Samsung will have to bring in new customers to offset the loss of Apple's orders, and could implement measures such as cutting its quotes significantly, the sources believe.

　　Globalfoundries has been aggressive vying for 28nm chip orders from major fabless IC firms. The foundry has secured 28nm chip orders from Qualcomm and MediaTek, and become the world's second-largest contract chipmaker in the 28nm sector, the sources said.