COLORADO SPRINGS, CO (AP) Intel Corp. is spending nearly $400 million to upgrade its computer chip factory here in a move expected to create several hundred jobs by 2008.

The news came as a boost to a city that has lost more than 6,000 high-paying technology jobs since a severe technology downturn in 2000.

The project will add a second manufacturing area where workers will produce chips for wireless computers and other hand-held electronic devices beginning late next year.

Work on the nearly 4-acre “clean room” began July 14. The project will create several hundred jobs, mostly in manufacturing and engineering, with limited hiring starting right away, said Judy Cara, an Intel spokeswoman. The factory already has 796 employees.

In addition, up to 900 construction workers might be working on the upgrade at a time, the company said.

Fred Crowley, an economist at the University of Colorado at Colorado Springs, estimated that for every 100 workers Intel hires, 75 jobs will be created in the community. That would generate $10 million in added income annually, he said.

The city also would receive $115,000 a year in additional sales taxes for every 100 jobs created at Intel, Crowley estimated.

The Intel factory currently makes flash memory chips used in wireless gadgets like mobile phones, but that will be phased out in favor of WiFi, or wireless fidelity computer chips, and other communications chips.

“They are putting in infrastructure for the fastest-growing and probably the most important part of their business,” Mayor Lionel Rivera said. “So that’s exciting for us. It tells me Intel is going to be here for a while.”

Intel is in the middle of a $35 million project to install a WiFi manufacturing process at its factory. The project is expected to generate 20 to 30 jobs when it is completed this year.

Workers will assemble WiFi chips for notebook computers fitted with Intel’s Centrino technology.

The factory also houses a design center where next-generation wireless cellular communications chips are being developed.

Intel bought its building in Colorado Springs from Rockwell International in 2000, but had used only about half its space.

In 2001, the Santa Clara, CA-based chip manufacturer scrapped an expansion plan after the technology downturn. The next year, Intel shelved plans to buy land near the Colorado Springs Airport.

Intel also has a computer chip factory at Rio Rancho, NM.

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