Fab 12 and Fab 14 are the semiconductor maker's 12-inch fabs, which process silicon on advanced 45nm processes and beyond.

The installation of the equipment for capacity expansion is set to begin in the second half of 2010.

Sources said the company intends to start installing the new equipment at Fab 12, located at the Hsinchu Science Park (HSP), in Taiwan, in October 2010.

The equipment for the expansion at Fab14, located in southern Taiwan, is expected to be moved by the end of 2009.

In its latest quarterly financial report, Taiwan Semiconductor Manufacturing Company said the total managed capacity in 2009 will go up by 6 per cent, on year, to 9.937 million 8-inch equivalent wafers. The capacity for 12-inch wafer fabs is expected to rise by 10 per cent in 2009.

The managed capacity of TSMC in 2008 came to a total of 9.377 million 8-inch equivalent wafers – representing a hike of 13 per cent from 8.29 million units a year earlier. And, in 2008, the capacity for 12-inch wafer fabs went up by 27 per cent.

Though the company has previously decelerated expansion of its 12-inch capacity in the midst of a slowdown in the industry, it started speeding up the expansion in the second quarter of 2009.