TSMC, the world's largest contract maker of chips, will increase investments in new fabs, as the company sees higher demand for semiconductors for tablet devices and mobile phones.

Demand for 28-nanometer technology is stronger than we expected and TSMC is currently unable to meet demand for its 28- nanometer technology, according to Chairman and Chief Executive Officer Morris Chang. The higher spending also comes from TSMC's decision to commence using 20-nanometer technology earlier than previously planned, he said.

The Taiwanese company today held a ceremony at the South Taiwan Science Park in Tainan for Phase 5 of its Fab 14 GigaFab. Following TSMC's Fab 12 Phase 6 in Hsinchu, this facility will be another key production center for TSMC's 20nm technology, providing TSMC with more capacity.

The company's 20nm technology is scheduled to begin volume production at TSMC's Fab 12 next year. The Fab 14 Phase 5 facility will be TSMC's second 20nm-capable fab, scheduled to begin volume production in early 2014. Combined with the planned Fab 14 Phase 6, total cleanroom area will reach 87,000 square meters. TSMC also expects to launch its 20nm technology ahead of foundry peers.

"TSMC will continue to invest in Taiwan and fortify its trinity of strengths - technology leadership, manufacturing excellence, and customer trust," said Morris Chang, who hosted the ceremony. "Our mission is to be the trusted technology and capacity provider of the global logic IC industry for years to come. In fulfilling this mission, we further solidify TSMC and Taiwan's indispensable position in the world semiconductor industry. This groundbreaking for Fab 14, Phase 5 represents TSMC's capability to develop leading-edge technology, build advanced capacity, and satisfy customer demand. It also lays the foundation for TSMC's next wave of growth."

Fab 14 is TSMC's second 12-inch fab following Fab 12, and Phase 1 of the facility began volume production in 2004. With Phases 1, 2, 3 and 4 now in operation, Fab 14 has capacity of 550,000 12-inch wafers per quarter, making it the world's largest 12-inch fab. The output of Fab 14 phases 1 through 4 has an estimated annual revenue of US$6 billion, and TSMC expects the combined annual revenue of Phases 5 and 6 to reach a similar scale.

Currently Fab 14 is staffed by approximately 4,600 employees, and the expansion of the facility will create another 4,500 job opportunities.

TSMC also said that Fab 14 Phase 5 would follow in the footsteps of Fab 14 Phases 3 and 4 to apply for "gold" level certification under the U.S.