Chipmaker Advanced Micro Devices (AMD) is to invest $2.5 billion in upgrading and expanding its two factories in Germany.
The money, to be spent over three years, will be used in part to overhaul AMD's first chip factory in Dresden, Germany, refitting it with equipment to handle larger silicon wafers that will yield more than twice as many processors as existing machinery.
AMD will also expand capacity at its new, second Dresden facility, where it began producing test chips last month and is preparing for volume production soon.
In addition, AMD will build a new "clean room" next year where final preparation of wafers for both factories will take place.
AMD said the expansions would let its Dresden facilities process a combined 45,000 300-millimeter wafers per month by the end of 2008.
The expansion comes as AMD steadily gains market share from larger rival Intel and highlights the company's desire to prove that its once-crippling supply problems are in the past.
It also follows the announcement this month that Dell will start using AMD chips in high-end servers for powering business networks, fuelling expectations that the world's top PC maker will offer more AMD products in the future.