An integrated circuit device includes a substrate having a first portion in a first device region and a second portion in a second device region. A first semiconductor strip is in the first device region. A dielectric liner has an edge contacting a sidewall of the first semiconductor strip, wherein the dielectric liner is configured to apply a compressive stress or a tensile stress to the first semiconductor strip. A Shallow Trench Isolation (STI) region is over the dielectric liner, wherein a sidewall and a bottom surface of the STI region is in contact with a sidewall and a top surface of the dielectric liner.