IRELAND is one of a number of locations bidding for a new £850 million semiconductor plant, which would create 1,500 new jobs over the next three years.

The giant South Korean based Hyundai corporation wants to build a new fabrication plant in Europe and has had discussions with IDA Ireland about locating the operation in either Dublin or Cork.

Hyundai is also considering a number of other European locations, including Scotland the Republic's main competitor for mobile electronics investment and northern England.

IDA Ireland has a policy of not commenting on negotiations with foreign companies and a spokesman declined to comment on the matter.

However, industry sources argue that the prospects of the Republic winning the new Hyundai plant are "very slim" as Korean companies have traditionally tended to favour locations in the UK. According to recent British newspaper reports, Scotland is currently favourite to win the investment.

IDA Ireland also made a recent bid for Lucky Goldstar's (LG International) proposed new £1.1 billion semiconductor plant. The South Korean company, which will create 1,500 jobs at its new plant, has also talked to agencies in Scotland and Wales.

Recent media reports in Britain suggested that the group plans to site the facility beside a proposed new factory which its electronics division is likely to build in south Wales.

But a dispute between senior executives at LG may force a rethink. LG's chairman is understood to want the semiconductor plant to be constructed beside the electronics factory on a large campus style site, but the head of the company's semiconductor division would prefer the two factories to be separate.

IDA Ireland had only bid for the semiconductor plant and if LG decides to separate the two investments, the Republic could still be in the running for the plant.

Senior executives at IDA Ireland want to attract another two large semiconductor wafer fabrication plants over the next three years and discussions are ongoing with a number of potential investors.

Specific locations in Dublin and Cork have been identified for a possible new wafer fabrication plant, which would employ a large, highly skilled work force, and need to have good road and airport access.

About 30 international companies are known to be interested in building new wafer fabrication plants and one major player, Texas Instruments, has already said it is talking to both IDA Ireland and its Northern counterpart, the Industrial Development Board.

The giant US electronics company, Intel, operates a wafer fabrication plant in Leixlip, Co Kildare, and is currently adding a second facility which will boost total employment at the site to about 7,000.

Other semiconductor companies already in Ireland include Analog Devices, NEC and Xilinx.

According to the US Semi-conductor Industry Association, the world market for computer chips will grow by 6.7 per cent this year, a downgrading from its earlier forecast of a 26 per cent expansion.

The industry contracted by 4.6 per cent during the first quarter of the year, but it is expected to grow in the second half of the year to produce the 6.7 per cent expansion.

Chip sales for the rest of the decade should record double digit growth rates, according to the association's predictions.