Rockwell to Announce Newport Expansion : Technology: O.C. is expected to get the nod over Colorado Springs, bringing 150 new jobs. The company is looking to meet rising microchip demand.

NEWPORT BEACH —  Rockwell International Corp. is expected to announce today that it has chosen Newport Beach over Colorado Springs, Colo., as the site for expansion of its microchip manufacturing operations, a move that will add 150 new jobs.

The $200-million expansion comes a year after a similar expansion at the same site by Rockwell, which is experiencing surging demand for computer modem microchips. Rockwell already has 1,600 workers at its Newport Beach plant.

“Right now, we have demand that outstrips supply. We are growing as fast as possible,” said Dwight W. Decker, president of Rockwell’s telecommunications business segment.

The company considered building a plant in Colorado, but decided that it makes more sense to keep its engineering and manufacturing facilities together at the Newport Beach site.

He said the company plans to add 1,000 engineers and chip designers to the Newport Beach operations over the next five years.

“There are some difficult things about Southern California, but this is a wonderful area to live in,” Decker said.

Although Decker said Orange County’s financial problems did not figure in Rockwell’s decision to expand here, county economic development officials said that the decision shows the county still has business appeal.

“We could not be more excited about their decision,” said Ken Moore, president of the Orange County Economic Development Consortium, a group of business and government leaders that worked for several weeks to persuade Rockwell to expand here. “It is also a strong statement for Orange County despite all the negative things we read about Orange County financially.”

Wayne Wedin, chairman of the Orange County Business Council, said Rockwell’s decision shows that the county will continue to thrive even with the voters’ rejection of a ballot measure last month to raise the sales tax to make up for losses of $1.7 billion in the county’s investment pool.

“I think this is part of a pervasive attitude from the business community that the election [result] certainly . . . doesn’t mean the world is coming to an end.”

Rockwell officials say the Newport Beach expansion should solidify the company’s 75% share of the market for computer modem chips, as well as a growing demand for chips in cellular telephones.

“The market is going through the roof. We are astounded at the growth rates,” said Mel Thomsen, an owner of Pathfinder Research, a San Jose firm that tracks the microchip industry.

Rockwell’s telecommunications unit is still a relatively small slice of the giant aerospace and technology concern, but it has been one of Rockwell’s star performers. While aerospace sales slid last year, telecommunications recorded a sales increase of 28% to $699 million.

The telecommunications segment is part of the electronics division, which accounted for half of the company’s operating earnings of $1.2 billion in the fiscal year ended Sept. 30.

“Rockwell is diversifying out of the defense business and is looking to stay on the cutting edge,” said Tim Cooley, president of Partnership 2010, an economic development consortium in Orange County. “The comparative advantages here for the technology they need offset the higher cost of doing business here.”

The planned expansion will bring Rockwell’s Newport Beach site to maximum capacity, and the company eventually could decide to build a new plant in Colorado, Rockwell’s Decker said. He said that Orange County and the city of Newport Beach agreed to “fast track” planning and inspections, and that city has been asked about tax incentives, although nothing was agreed upon. City officials said discussions will continue this week.

“Rockwell is one of the largest employers in town,” said Newport Beach City Manager Kevin J. Murphy. “They provide the kind of high-quality, high-paying jobs that any city would give their right arm for.”

The company is the 12th-highest taxpayer in Newport Beach, paying about $330,000 in taxes a year.

Part of the expansion will involve converting offices into manufacturing space. Office workers will be moved into a nearby four-story office building that Rockwell recently acquired.

* NEW PRESIDENT

Don H. Davis is named president and CEO of Rockwell International. D6

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Rockwell Expansion * Location: Telecommunications Division, Newport Beach * Start date: September, 1995 * Projected completion: May, 1996 * Estimated cost: $200 million * Current employees: 1,600 * New jobs from expansion: 150 * Current square footage: 67,000 * Square footage after expansion: 87,000 * Product: Computer modem chips * Current production: 20,000 eight- and five-inch wafers per month * Production after expansion: 25,000 eight-inch wafers per month

Source: Rockwell Telecommunications; Researched by JANICE L. JONES / Los Angeles Times