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Intel opened a new chip plant in Europe on Thursday as it stepped up its competition with rival Advanced Micro Devices (AMD) to expand manufacturing capacity and market share.

Speaking in Ireland at the launch, Paul Otellini, chief executive, said Intel was the number-one investor in chip plants and equipment in the semiconductor world.

“I think we’ll significantly alter the computer landscape,” he said of the processors the factory would produce later in the summer, based on its first new micro-architecture in five years.

Intel has invested $2bn in the new fabrication plant alongside existing facilities at Leixlip, near Dublin. It has begun high-volume production of chips cut from 300mm-diameter wafers and featuring circuits 65 billionths of a metre wide.

The process succeeds 200mm wafer and 90 nanometre circuits, offering major efficiency improvements and cost savings.

AMD was reported this week to be in discussions to build a $3.5bn chip plant in upstate New York. Sheldon Silver, the state’s Assembly Speaker, said he had met AMD representatives to discuss terms of an agreement.

Last month, AMD said it would expand production at its main chip plant in Dresden, Germany, at a cost of $2.5bn.

Intel has lost market share in recent quarters to AMD, but still supplies the chips for about four out of five personal computers. However, AMD is aiming to grab a third of the market for the dominant x86 microprocessor, and says it will have the manufacturing capacity to achieve that by 2008.

It trails Intel in converting to 300mm wafers and 65nm chips, and relies on IBM and the chip foundries of Chartered Semiconductor in Asia to help meet its current needs. Intel said on Thursday it had reached a crossover point, with its Irish factory becoming the third to produce 65nm chips.

“We are now producing more 65nm than 90nm processors. We are hitting our commitments and are ahead of schedule,” said Tom Franz, general manager of fabrication manufacturing.

Intel will introduce a new server chip next week, followed by desktop and notebook chips in July and August.

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