Qualcomm and MediaTek have both shifted some of their 28nm chip orders from Taiwan Semiconductor Manufacturing Company (TSMC) to other foundry chipmakers that offer cheaper quotes, according to industry sources.

In the face of strong competition in China's smartphone-chip market, Qualcomm and MediaTek are looking for alternatives to TSMC, which is standing firm on prices, said the sources.

Prices for entry-level and mid-range smartphone ICs have fallen over 20% in the past year, prompting chip providers to approach second-source suppliers to lower costs, the sources indicated.

In addition to pursuing lower manufacturing costs, Qualcomm and MediaTek intend to diversify their foundry sources to reduce their reliance on TSMC, the sources said. The two handset chip vendors previously experienced tight supply of 28nm chips from TSMC.

United Microelectronics (UMC), Globalfoundries and Semiconductor Manufacturing International (SMIC) have obtained more 28nm chip orders shifted from TSMC starting the end of the first quarter, the sources noted.