Samsung Electronics, the world's second-largest semiconductor maker, said it has begun mass production of logic chips using its second generation 14-nanometer FinFET process.
The South Korean tech giant said its client Qualcomm's Snapdragon 820 processor will be using the 14-nanometer Low-Power Plus (LPP) process and will be in devices in the first half of the year.
Samsung said chips made in the new process have performance speed boosted 15 percent and consume 15 percent less power, compared with being made in a Low-Power Early (LPE) process that the firm first applied to its Exynos 7 Octa last year.
"We are pleased to start production of our industry-leading, second generation 14-nanometer FinFET process technology that delivers the highest level of performance and power efficiency" said Charlie Bae, executive vice president of sales and marketing at Samsung's system LSI Business, its processor and contract-making division. "Samsung will continue to offer derivative processes of its advanced 14-nanometer FinFET technology to maintain our technology leadership."
Main contract-making rival TSMC is touting a 16-nanometer process. Samsung and TSMC have been competing to clinch clients such as Apple, Nvidia and Qualcomm.
Samsung and LG have launched budget smartphones in their home country of South Korea where demand for high-priced models have declined amid market saturation and commoditization.
Samsung said it will launch the new Galaxy A5 and Galaxy A7 starting on February 14 through all three local mobile carriers. The new models have their specs upgraded compared with last year's iterations and are priced around 500,000 won ($415).
They will also get Samsung Pay, the company's mobile payment app, which was previously only available in last year's flagship models such as Galaxy S6 and Galaxy Note 5. It also has fingerprint recognition.
LG, meanwhile, will launch its low-budget model the K10, first shown off at the Consumer Electronics Show last week. It will cost around 200,000 won ($166)
In 2015, LG launched its first budget model, called the LG Bolt, in April. The quicker launch of its new low-costing model indicates the pressure on LG to maintain relevance in South Korea's saturated market.
Both Samsung and LG models have 1.3 megapixel back camera and a 500 pixel in the front.
Since the government launched a law that caps subsidies, Samsung and LG saw demand for high-end phones steadily decline over last year.
Smartphone penetration in South Korea is 83 percent and second only to Singapore's 88 percent, according to Google Asia Pacific Blog.
KT, South Korea's second-largest mobile carrier, initially planned to launch Xiaomi's Redmi 3 in the country, priced at around only 100,000 won ($83), earlier this month. Preorders were high but KT abruptly cancelled the launch.
A senior executive at KT, who requested anonymity, said there was pressure from a local smartphone vendor not to go ahead with the launch, though he declined to name the firm.
Samsung, LG and Pantech are the dominant smartphone makers in South Korea and together control over 90 percent of the market.