Computer chip maker Intel yesterday opened the €1.6 billion extension to its Leixlip plant. The new state-of-the-art 52,000 sq m site, known as Fab 24-2, will produce microchips for use in personal computers and laptops around the world.

The plant, which contains millions of euro worth of high-tech equipment, is the first of its kind outside the US and Intel's third such production site. Intel currently makes the microprocessors that drive 90 per cent of the world's computers.

Fab 24-2 will use Intel's advanced 65nm manufacturing process to produce chips of the same size in high volume. Most companies have not yet started manufacturing chips of that size.

According to Paul Otellini, Intel's chief executive and president, the new chips, which will be used in notebooks and personal computers, will enable the machines to work faster, be more energy efficient and provide greater security to their users.

"It will change the game in terms of what technology can do," he told a gathering of journalists after the official opening of the plant.

"These are exciting milestones for Intel, which will help propel the company's growth."

Taoiseach Bertie Ahern welcomed the opening of the new plant, saying it was a continuation of the success story that is Intel Ireland. "This site has made a substantial contribution to the economy of the surrounding area and to the entire country," he said. "Its success gives huge credibility to our country as a high technology destination."

Intel, the world's largest chip maker, was forced to fund the development of the plant on its own after the European Union prevented the Government from providing €170 million in grant aid because it wasn't sure the money would be used for innovation. Since its arrival in Ireland in 1989, Intel has invested $7 billion (€5.5 billion) in the State and now employs 5,500 people at the Leixlip site, which is its European manufacturing and technology centre. It employs another 150 people in Shannon.

Mr Otellini said the new plant would play a central role in Intel's future roadmap and help fuel some of the revenue growth the group is expecting to see in the second half of this year.

In March, the US-based company issued a profit warning, saying that first-quarter revenue would be lower than expected after demand declined amid increased competition from rival chipmaker Advanced Micro Devices (AMD).

Mr Otellini yesterday declined to give any update on the group's performance ahead of its results next month, but said he stood by the company's original forecast that business in the second half would be better than in the first.

He also said the group would be updating the market on its restructuring plans in July. In January, Intel announced plans to rebrand its businesses in a bid to shift the focus away from its core PC business into consumer products.

Mr Otellini said yesterday he believed the new chips would be very popular among the gaming community. During the summer Intel will introduce three new products, including its Intel Core 2 Duo processors for both desktop and portable computers.

The Government and Intel yesterday signed a memorandum of understanding outlining a commitment to boost computer and internet penetration in the Republic. Mr Otellini welcomed the initiative, saying it showed the world that Ireland was serious about being a high-technology business location. Seán Dorgan, head of IDA Ireland, also praised the agreement, saying it was essential for the future of the State.