San Francisco  - Computer chip-maker Intel announced plans to invest 7 billion dollars over the next two years to expand and transform three US manufacturing plants to produce the smaller 32- nanometer transistors.

The move to invest in the plants in Arizona, New Mexico and Oregon could see Intel gain a priceless advantage over smaller rivals like Advanced Micro Devices which don't have the financial resources to invest in new fabrication facilities.

AMD is currently upgrading its plants from 65 nanometers to produce the smaller 45 nanometer chips.

The new chips could dramatically slash costs, and allow Intel to extend its dominance from computer chips to chips that power cell phones and other electronic devices.

"The chips (that the new factories) produce will become the basic building blocks of the digital world, generating economic returns far beyond our industry," Intel CEO Paul Otellini said. "We're investing in America to keep Intel and our nation at the forefront of innovation."

The announcement came after the chipmaker last month announced plans to cut as many as 6,000 manufacturing jobs and shut down four facilities in California, Oregon, Malaysia, and the Philippines. (dpa)