Intel will invest $650 million to increase output at an existing chip factory in New Mexico in order to reduce costs and meet customer needs, the company said.

Early next year, Intel plans to begin installing advanced 300-millimetre wafer production equipment at the Rio Rancho facility, which drastically reduces the cost of a microprocessor. The company estimates it can produce more than double the number of chips on one 300mm (12-inch) silicon wafer than on an older 200mm (8-inch) wafer.

The new 300mm factories are also more environmentally friendly, the company said, using 40 per cent less energy and water per chip than older technologies.

The factory will begin production in early 2007, and create 300 new manufacturing jobs in New Mexico, Intel said.

The company said it has four factories producing chips on 300mm wafers today, including the New Mexico facility, two plants in Oregon, and one in Ireland.

In July, Intel announced plans to build its next 300mm factory in Chandler, Arizona. The new plant is scheduled for completion in the second half of 2007 at a cost of $3 billion.