Hsinchu, Taiwan – Taiwan Semiconductor Manufacturing Co (TSMC) said its planned manufacturing facilities in China will be aimed at the growing mainland market and not exports.

TSMC Chairman Morris Chang said the company’s motive was not to cut costs, but to compete with mainland chipmakers that may get preferential treatment, reported Reuters.

“Even if we had competitors in the United States, the US would not favor domestic manufacturers, but we believe that China will not be such an open market,” Chang said. “We would have major difficulties selling there. This is the reason why we are going to the mainland — if it was completely open, we wouldn’t have to go there.”

TSMC studies showed the costs of semiconductor production in China could actually be greater than that of Taiwan, he said.

TSMC is currently scouting for sites to set up a semiconductor plant in China, where the market for semiconductors is growing at an estimated 20% a year as the global market is set to rise about 6% this year.

At the same time, it has also scheduled to break ground on two more microchip plants in Taiwan this year.

Additionally, TSMC’s board of directors has approved NT$69.28 billion (US$1=NT$34.565) in capital spending for several projects, the company said.

The projects include expanding production capacity for the company’s 0.15-micron and advanced copper process technologies, as well as the increase of its maskmaking capacity for 0.13-micron and 0.09-micron process, Dow Jones reported.

The company didn’t give a timeframe for the spending plan.

TSMC’s board also decided to allocate an additional NT$ 1.11 billion for spending in 2002 to be used for R&D investments, production improvements, and IT updates, the company said.

The board also approved a US$20 million investment in EUV LLC, a consortium led by AMD, IBM, Infineon Technologies, Intel Corp., Micron Technologies Inc., Motorola Inc., and TSMC. It’s dedicated to developing EUV lithography technology.