By Ben Blanchard and Faith Hung

TAIPEI (Reuters) - TSMC said on Monday that its newly built domestic fab would add 7,000 tech jobs to the island's economy and that it will continue to expand in Taiwan, following concern that its investment in the U.S. will dilute its presence at home.

Y.P. Chyn, TSMC's executive vice president and co-chief operating officer, made the comments at a ceremony at the fab in southern Taiwan's Kaohsiung, in footage carried on Taiwanese television stations.

The ceremony at the factory, which produces TSMC's most advanced chips employing 2 nanometre technology, comes the same month the company, the dominant producer of advanced semiconductors, announced a $100 billion investment plan in the United States.

Both TSMC and Taiwan's government have repeatedly said a substantial amount of the company's production will remain on the island. Taiwan Semiconductor Manufacturing Co is so important to Taiwan's economy that it is often referred to as the "sacred mountain protecting the country".

Chyn said the new fab is on track to begin volume production of 2nm wafers in the second half of this year, as scheduled.

TSMC did not directly address concerns about the effects of its massive investments in U.S. production on the local economy, making only a general allusion to the importance of the company's growing global footprint, while giving assurances that Taiwan will continue to have a key role as the company's home base.

"We'll continue to look for space to expand investments in Taiwan," said Chyn, adding the company will continue to meet demand of global customers.

Taiwan Premier Cho Jung-tai thanked TSMC for reiterating it will keep its roots in Taiwan even as it expands around the world.

"Most important foundations will remain in Taiwan," said the premier. "TSMC will always be our national team."

The new U.S. expansion plan comes after U.S. President Donald Trump has repeatedly criticised Taiwan, saying it has taken away American semiconductor business and that he wants manufacturing to return to the United States.

Trump has considered imposing tariffs on semiconductor imports. This week he is set to announce sweeping reciprocal import tariffs on all countries.

The 2 nm process is well on track for volume production in the second half of this year as scheduled, the company said on its latest earnings call in January. As well as Kaohsiung, 2 nm chips will also be made in Hsinchu, TSMC's headquarters.

Taiwan's dominant position as a maker of chips used in areas as varied as cellphones, cars and fighter jets has sparked concerns of over-reliance on the island, especially as China ramps up pressure to assert its sovereignty claims.

As a key manufacturing partner to Nvidia, Apple <AAPL.O> and Qualcomm, TSMC is central to the U.S. chip industry, and bringing more of its production to U.S. soil would solve a major supply chain risk for those firms.

(Reporting by Faith Hung and Ben Blanchard; Editing by Christopher Cushing)