Taiwan Semiconductor Manufacturing Company (TSMC) will begin volume production of 16nm FinFET process products in the second quarter or early third quarter of 2015, according to company co-CEO CC Wei.

Despite rising competition, TSMC will continue to lead its peers in the combined segment of 20nm and 16nm processes, Wei said at the company's latest investors conference.

Sales of 16nm process products are expected to account for 7-9% of TSMC's total revenues in the fourth quarter of 2015, Wei added.

The number of clients looking for capacity of 16nm process has climbed to over 60, which will make the 16nm process the fastest growing process at TSMC built on a sound ecosystem, TSMC said.

Additionally, TSMC will begin to tape-out 10nm process products in 2015 before entering commercial production in 2016, according to co-CEO Mark Liu. A total of 10 clients have joined the development and design of the 10nm process.

TSMC's capex for 2015 will top over US$10 billion, compared with an estimated US$9.6 billion for 2014, said CFO Lora Ho.

The 2015 capex will be mainly used for developing advanced processes, including 16nm and 10nm processes, Ho added.

TSMC expects its sales to grow 4-5% sequentially to NT$217-220 billion (US7.13-7.23 billion) in the fourth quarter of 2014. Ho said. Looking forward, TSMC is expected to achieve double-digit sales growth in the next two years.

However, gross margin is expected to drop to 48-50% in the fourth quarter of 2014 compared to 50.5% a quarter earlier, while fourth-quarter operating margin will reach 38-40% compared to 40.4% in the previous quarter.

According to a TSMC internal estimate, global shipments of smartphones are expected to reach 1.5 billion units in 2015, increasing 19% from a year earlier. For the 2014-2015 period, shipments of high-end smartphones are expected to grow 2% annually, while those of mid-range models will expand 14% year-on-year. Shipments of entry-level smartphones alone will increase 34% on-year in 2014.