Xilinx, a US technology firm which designs advanced semiconductor chips, will invest $41 million at its Dublin centre and create 500 jobs.
The firm, which already employs 360 people at its plant in Citywest, will begin construction of an 128,000 sq ft extension to its facility immediately.
At least 75 per cent of the recruits will be at graduate level with skills in software development and various forms of electronic engineering.
Xilinx designs and produces highly complex semiconductor chips capable of being programmed individually for use in a wide range of electronic systems.
Advanced integrated circuit design, high-level software development, design services and supply chain management are all conducted at the Dublin site.
Dublin also acts as a support centre for Europe and the Asia Pacific region and contributes 30 per cent of the firm's overall revenues from programmable logic.
Xilinx has been one of the fastest-growing technology firms in the past few years and recently reported a 70 per cent increase in third-quarter revenue to $437 million (€476 million). In Dublin yesterday, Mr Wim Roelandts, president and chief executive of Xilinx, said the firm would continue growing this year at a slower rate of about 20 per cent.
He said Xilinx was less sensitive to the economic slowdown in the US and instead this offered an opportunity to increase market share against competitors.
"In 15 years we have never fired an employee for economic reasons," he said. "We have no plans to slow down or fire people."
Xilinx employs some 2,600 people worldwide and has a market capitalisation of about $16 billion. Its customers include Cisco Systems, Lucent Technologies, Ericsson, 3Com and Nortel Networks.
Mr Roelandts said the company had decided on Dublin because of a well educated, motivated workforce and the positive attitude of the Government.
An IDA Ireland spokesman said last night the development would be supported by a small grant aid package.
The Tanaiste, Ms Harney, said the investment was a good model whereby existing projects were further embedded in the economy.
"Ireland is the most successful economy in Europe, with not only the lowest corporate tax rate but also a flexible workforce," she said.
