Hyundai set to build pounds 1.5bn chip plant in Scotland

Scotland is hoping for a big jobs boost next week from Hyundai, the giant Korean electronics group. Hyundai is set to announce plans for a pounds 1.5bn plant in Scotland's Silicon Glen which will create 1,500 new jobs.

Michael Forsyth, Scottish Secretary, is tipped to make an announcement at the Conservative Party conference in Bournemouth on Tuesday.

The Scottish Office declined to comment and a spokesman for Hyundai said: "No commitment or decision has been made. We are continuing to investigate possible sites in Europe."

However, Hyundai is thought to have been examining possible sites in Britain and the Irish Republic for a silicon chip plant. A 500-acre site at Dunfermline in Fife is understood to have emerged as one of the favourites. The Koreans were reported to have taken an outline decision in favour of Dunfermline some months ago.

The North-east was considered but ruled out because it lacked a large enough site.

The plant would be one of Scotland's biggest inward investments and an announcement at the Tory conference would bring political kudos to Mr Forsyth, easing much of the sting created by the closure of the nearby Rosyth naval base.

It would also bolster Tory claims that Scotland is fast becoming the "cutting edge" of a Britain which itself is becoming the enterprise centre of Europe.

Although Scotland has attracted much Far East and US investment to its booming electronics sector, it lost out to Wales earlier this year when another Korean firm, LG (formerly Lucky Goldstar), chose the principality for a pounds 1.7bn electronics complex employing 6,000 people - the biggest single foreign investment in western Europe.

The Scottish Office said: "At any particular time, Locate in Scotland [an inward investment-seeking agency] is in discussion with a number of companies about potential inward investment projects.

"All such discussions are commercially confidential unless and until the company chooses to make a public announcement about its plans.

"Nothing in this statement should be taken as confirming or denying that LIS is currently in discussion with any particular company."

Hyundai's Scottish plant would be part of the group's world-wide expansion plans which include the development of four semiconductor plants by the end of the century. The total investment is expected to be in the region of pounds 4bn. The company has earmarked an additional pounds 3bn for the development of non-semiconductor plants.

Daewoo, another Korean giant which already sells its cars in Britain, is also expected to build a UK manufacturing plant. It is expected to announce plans to build a research and development facility, possibly in the West Midlands, as a forerunner to a car plant. Daewoo is also considering building a pounds 750m semiconductor plant in Northern Ireland in conjunction with Texas Instruments.

The Government and its development agencies hope Korea will follow Japan with a steady flow of inward investment into the UK.

Britain already accounts for more than half of investment by Korea in western Europe.

The UK is a popular choice due to relatively low wage costs and a high level of skills.