Intel, the world's largest producer of memory chips, warned that shortages of "critical components" in the industry could continue for six to 18 months because of higher-than-expected demand for personal computers and mobile phones.

Days after announcing a 1,000 job expansion of the group's Irish plant, Mr Craig Barrett, Intel chief executive officer, said the shortage had been caused by under-investment in production facilities in 1997, 1998 and 1999. On top of this there had been inaccurate forecasts on the future growth of demand for cell phones and PCs.

Mr Barrett said the effects of the shortages were being felt already. "The price of memory is going up and retail prices for PCs have stabilised and gone up." Motorola, the mobile phone manufacturer, warned in May that the shortage was limiting production.

Mr Barrett said the shortage was the reason for Intel investing $6 billion (€6.3 billion) in new production capacity this year, some of which would be accounted for by Monday's announcement of a $2 billion investment in its Irish plant.

Intel plans to build a new 13,500 sq ft semiconductor facility at Leixlip, Co Kildare. The new plant will produce the new 1.3 micron technology. Separately, Mr Barrett urged European regulators to encourage competition to bring down the cost of internet access.

"Business leaders should demand reduced telecommunications costs to increase internet usage and accelerate e-commerce."