Taiwan Semiconductor Manufacturing Co (NYSE:TSM) has accelerated progress on its advanced 2-nanometer fab in Kaohsiung. The company held an equipment installation ceremony six months before schedule, reflecting its efforts to meet the global demand for advanced chips.

Kaohsiung Mayor Chen Chi-mai highlighted the milestone during a city council Q&A session, noting the facility's potential to boost artificial intelligence (AI) applications and stimulate industrial transformation in the region, Taipei Times reports.

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The chipmaker plans to establish four additional fabs in Kaohsiung, complementing its existing 3-nanometer and 5-nanometer facilities. According to Mayor Chen, these developments aim to form one of the most valuable semiconductor clusters globally. Several material, equipment, and parts suppliers have also set up operations in the city, further strengthening the ecosystem.

Taiwan Semiconductor confirmed to the Taipei Times that its 2-nanometer technology is on track for mass production next year, with performance and yield already meeting or exceeding expectations. The chipmaker is constructing a similar production line at its Hsinchu facility.

Chairman and CEO C.C. Wei recently told investors that demand for 2-nanometer technology has exceeded expectations, surpassing even the 3-nanometer capacity.

The chips are slated for smartphones and high-performance computing, with Apple Inc (NASDAQ:AAPL) and Advanced Micro Devices Inc (NASDAQ:AMD) expected to adopt them early.

Recent reports indicated AMD leveraging Taiwan Semiconductor's 3nm process to foray into the smartphone market, eying flagship devices like Samsung's models.

Taiwan Semiconductor is also preparing capacity for its A16 chips, which are in high demand for AI server applications. Wei emphasized the company's commitment to scaling 2-nanometer and A16 production to meet customer needs.

The chipmaker targets capital expenditures of $34 billion—$38 billion in 2025 to meet demand for advanced semiconductor manufacturing.