Staff numbers in computer giant Intel, already one of the State's largest employers, are set to increase as part of a restructuring at its Leixlip, Co Kildare facility which will see assembly operations phased out, the company said last night.

Some 750 employees involved in the assembly function were told yesterday that their existing jobs would be eliminated by the final quarter of next year as Intel upgraded its Irish operations to produce the latest microchips.

Each of the assembly staff has been offered retraining and redeployment to allow them to transfer to the new production process, for which the company estimates it requires an additional 1,000 employees.

As a result, an Intel spokesman said last night that the move would involve a net increase in employment numbers although he declined to specify a figure.

He said that workers transferring from the assembly facilities, which manufacture the Pentium III Xeon processor for use in computer servers, would have their existing pay grades preserved.

The spokesman claimed that employees were already aware that assembly would be phased out but he refused to comment on the response of staff to yesterday's announcement - which was made at a regular staff meeting. Training modules would be provided.

Intel is planning to invest £300 million (€380 million) in its Irish operations as part of the move to more sophisticated microchip technology. Existing facilities will be upgraded and, according to the spokesman, there will be significant extra employment for construction and other contractors.

An IDA Ireland spokesman last night welcomed Intel's move and said the process of change was in line with the model it encouraged. "The companies and sectors that don't manage this process over coming years will be the companies and sectors laying off workers in two or three years time," he added.

Intel began a £30 million investment last February to prepare its Leixlip facility for the production of its next generation chip, which will replace .25 micron silicon with a .18 micron alternative, allowing it to produce greater volumes of higher-performance products at lower cost. It is expected to reach the market next year.

Intel will be the first semiconductor company to engage in mass production of the .18 micron processor which can clock speeds of 600 megahertz and greater.