A semiconductor device includes a substrate, a fin structure disposed over the substrate and including a channel region and a source/drain region, a gate structure disposed over at least a portion of the fin structure, the channel region being beneath the gate structure and the source/drain region being outside of the gate structure, a strain material layer disposed over the source/drain region, the strain material layer providing stress to the first channel region, and a contact layer wrapping around the first strain material layer. A width of the source/drain region is smaller than a width of the channel region.