Analysis: The creation of 400 new jobs by Intel is good news for the technology sector after a period of closures and redundancies caused by the collapse of the dotcom economy and a global recession.
Intel's decision to build a new fabrication plant in the Republic is the best indication yet that the technology industry has recovered and employment levels will grow over the next few years.
Sales of semiconductors, the chips which power a range of electronic and computer equipment, are an early indicator used by economists to predict growth in the wider technology sector.
And there are signs that sales of computer chips are booming.
The Semiconductor Industry Association said this month that global sales of semiconductors jumped 34 per cent to $48.8 billion in the first quarter compared with the same period a year ago.
The association now predicts a 20 per cent rise in worldwide sales, as corporate spending on technology appears to be picking up. This is good news for both companies and staff in the sector.
IDA Ireland is predicting its best year for investment since 2000, and Intel's renewed commitment may encourage other firms to take the plunge.
Intel's announcement of a €1.6 billion investment at Leixlip is particularly important for the Republic, which is facing serious questions over its competitiveness because of increasing costs.
Ignoring the temptation to follow many of its competitors by building fabrication plants in the Far East, Intel has twice in the past five years chosen Ireland for multibillion euro investments.
The new Fab24.2 is particularly significant given that it will bring the latest 65 nanometre manufacturing technology to Ireland before most of its US sites.
Intel Ireland's recent success in bringing its Fab 24 operation onstream was a big factor in the parent firm's decision to invest again at Leixlip. More than 500 Irish staff travelled to the US to learn the skills required to bring Intel's new 300 mm wafer technology into full production. The plant is now due to be formally opened next month by Intel.
Recent geopolitical tensions in Israel, the location of Intel's only other Fab outside the US, is likely to have worked in Intel Ireland's favour. Intel Ireland general manager Mr Jim O'Hara specifically highlighted the stable environment in the Republic as a factor.
There are strategic reasons for Intel's decision to upgrade its manufacturing technology for the second time in a few years.
Currently, Intel's newest plants use 90-nanometre technology to place the transistors which power microprocessors onto a single computer chip. But by reducing the size of the transistors, Intel will be able to cram billions more transistors onto a single chip. The more transistors that can be placed on a chip, the faster a chip can process information using less power and, crucially, generating less heat.
One analyst said last night Intel's decision to move speedily to a 65-nanometre process at its facilities may have been taken to eliminate some problems associated with its early 90-nanometre chips. Some of these had been found to generate excess heat.
This month Intel radically altered its product strategy by abandoning two chip development projects, and announcing it would focus on putting more processors on a single chip rather than focusing on chip speed.
The strategy shift comes as Intel encounters fierce competition from its rival AMD, which according to reports sold more chips than Intel in a week in April for the first time in its recent history. One of Intel's responses to the growing AMD competition has been to aggressively invest in new manufacturing capacity.
Intel Ireland will now play a huge role in helping the corporation meet this challenge head on.
Both Fab 24, which comes onstream next month, and Fab 24.2 - which will open in 2006 - will reduce the cost of producing microprocessors. Intel hopes to use the economies of scale generated by the more efficient technology to beat AMD on price.
