Motorola, the US electronics group, is investing £1.3bn in Scotland to increase its capacity to make chips for the booming mobile phone industry.
The group has bought the mothballed Hyundai semiconductor plant at Dunfermline and plans to employ about 1,350 people there within five years.
Motorola's new investment, its biggest in Europe, will only create 700 new jobs. It is planning to close its semiconductor plant at South Queensferry, near Edinburgh, and transfer its 650 strong workforce to the Dunfermline plant.
Motorola is already Scotland's largest manufacturing employer, with a total of 6,500 people at its semiconductor plants at South Queensferry and East Kilbride and its mobile phone handset operation at Easter Inch. But Hyundai's abandoned plans for Dunfermline involved a £2.4bn two phase development which would have created 2,000 jobs.
The Hyundai project, announced in 1996, was halted in 1998 after the first phase was built and equipped but before production started.
The South Korean company called off the project because of the financial crisis at home and the collapse in the market for dram chips which the plant was intended to make.
Hyundai never received promised government grants because no new jobs were created. Motorola, however, is expected to receive several million pounds in selective regional assistance.
Negotiations to secure the Motorola plant for Scotland have been going on for about a year. Scottish Enterprise, the regional development agency, became aware that the US group was planning a new European facility when it was exploring the possibility of having a contract semiconductor foundry built north of the border.
Scotland is believed to have fought off competition for the Motorola investment from alternative sites in Italy, France and Germany.
Motorola said the Dunfermline plant would make semiconductors based on eight inch wafers and using deep sub-micron technology for the rapidly growing mobile communications business.
Bill Walker, the senior Motorola vice president who announced the investment, said the new facility would help the company meet not only strong market demand but also anticipated future demand.
Motorola said the Dunfermline's semiconductors would incorporate its DigitalDNA technology which enables customers "to create smart products and new business opportunities in the networking and computing, wireless communica tions, transportation, and imaging and entertainment markets".
Robert Crawford, Scottish Enterprise's chief executive, said: "Motorola has already made an enormous contribu tion to the Scottish economy and I am delighted that this project will create more high quality employment opportunities. It is an enormous testament to the skills and quality of our workforce.
"Scotland needs to ensure that it has a strong foothold in this dynamic industry."
He added that the original investment made by Scottish Enterprise in the Dunfermline site and the surrounding infrastructure had also paid off. "One of Motorola's key requirements was to get this project off the ground as quickly as possible. The fact that we had a facility ready and waiting, with scope for expansion, was a major advantage."
Christine May, the Fife council leader, said the investment would have a strong effect on the local economy which in recent years had suffered significant job losses in defence related work.
