Undaunted by sluggish PC sales, Intel will spend $1 billion to expand and modernize its Hudson, Mass., microchip plant. The investment follows $800 million in facility improvements this year.

"This is the first construction other than parking lots since Intel acquired it two years ago," said Patrick Ward, an Intel spokesman. "This is confirmation that Intel believes Hudson is an efficient, well-run, cost-effective facility."

About $750 million, will be used to buy machinery to that could produce the company's most advanced chips, the Pentium 4 and the Itanium, which is still being developed. The remainder will pay for a 50,000-square-foot expansion to be completed in 2002. The addition has already been approved by the town.

Intel, based in Santa Clara, Calif., acquired the plant in 1998 from Digital Equipment Corp., as part of a patent infringement suit settlement. DEC (subsequently bought by Compaq Computer) used to manufacture Alpha processors at the facility.

Intel hired 1,000 manufacturing and support workers in Hudson this year. It expects to add 600 more next year. To fill the spots, it's strengthening ties with area schools, investing $120,000 in scholarship and training programs at Massachusetts Bay, Quinsigamond, and Springfield Technical community colleges.

News of the Hudson investment comes on the heels of a revenue warning from Intel. The company said fourth-quarter figures will be flat because PC and server makers such as Compaq and Gateway have seen sales soften. Intel did $8.73 billion in revenue in the third quarter.

As a result, analysts expect Intel to cut capital spending on new plants by more than 35 percent next year. In addition to the overhaul in Hudson, Intel has plants in Arizona, California, New Mexico, Oregon and Utah in the pipeline. It's also building a factory in Ireland.

Shares of INTC were off 1.781, or 5 percent, to 33.34 in midday trading. In the last 52 weeks, the stock, which trades in a notoriously cyclical sector, has been as high as 75.812 and as low as 31.25.