Motorola will invest $50 million (€46.4 million) in its mobile communications manufacturing facility in Swords, Co Dublin, and has begun recruiting 500 staff for the project. The company said that, by February, the factory would be producing well in excess of 10,000 high-end GSM mobile phones each day.

Motorola said the 500 jobs formed part of a general agreement with IDA Ireland on employment levels, announced some years ago. But the company stressed the potential for expansion in a burgeoning sector.

Mobile phone usage is growing especially rapidly in Europe, where the GSM system is used in all countries. Worldwide, Motorola said there were now some 305 million users, a figure expected to climb to at least 400 million by the end of next year, and more than one billion by 2003.

Speaking at the announcement, the Tanaiste, Ms Harney, said she and senior executives in Motorola had held a series of meetings at the company's Chicago headquarters last year and she had been impressed then by the firm's desire to expand in the Republic.

Motorola said it planned to have the facility up and running by next month and would begin a recruitment campaign immediately. The company said it required new workers with skills for a range of positions.

At the plant in Swords, a 75-metre test production line for Motorola's new "V" mobile phone is already running. By the end of the year, the company expects to have at least five such lines in operation.

Executives at the plant yesterday said that, with demand continuing to grow for the products, a further expansion was likely. This could see Motorola expand on to land to which it currently has access at Swords, or converting its mobile pager production lines, or both.

Last October, Motorola said it was seeking 125 voluntary redundancies from its Irish staff of 1,600, as part of a global rationalisation plan. It also closed one of the two buildings it was using at Swords. Motorola's semiconductor centre in Cork, which employs more than 300 people, was unaffected. The company said the restructuring was caused by a global slump in the semiconductor business.

At the time, IDA Ireland said the redundancies marked the end of the company's review in Ireland, and was "quite a positive outcome compared to what could have happened".