Computer chipmaker Intel is jumping into green energy with a multimillion-dollar investment in a solar-cell manufacturer to be based in Hillsboro.

Intel, the world's largest computer chipmaker and Oregon's largest private employer, announced Monday that it would lead a $50 million investment in SpectraWatt Inc., a startup that will make photovoltaic cells for solar modules.

Intel declined to say how big a stake it will hold in the new company, but the semiconductor powerhouse clearly is serious about grabbing a piece of a market that has exploded in recent years. The company created SpectraWatt with in-house technology, named five Intel employees to the management team and donated 20 acres at its West Union Campus for a 60,000-square-foot production plant.

"SpectraWatt is a great example of technology resulting from entrepreneurial efforts inside Intel," said Arvind Sodhani, vice president of Intel and president of Intel Capital, which made the investment. "This is an important investment for Intel Capital in the growing clean-tech sector, and we look forward to working with the company to support its expansion."

The solar photovoltaic business -- which makes the products that go into rooftop and on-ground modules that convert sunlight to electricity -- is a natural for high-tech companies. Semiconductor makers deal in silicon, the raw material for chips and solar cells.

"Solar power will become the domain of semiconductor leaders," said Ron Pernick, who heads Clean Edge, the Portland-based research and publishing firm.

Still, a solar-cell startup faces considerable challenges.

International heavyweights already are gearing up solar-cell production and moving to corner tight supplies of raw silicon. Technologies are changing rapidly as companies search for innovations that can drive prices down and volumes up.

"They're going into a market that's increasingly crowded and competitive," said Jim McGregor, an analyst with In-Stat, a research firm.

SpectraWatt would make the solar cells that go into solar modules. It would not assemble the modules themselves but would sell them to companies that do.

Construction this year

Construction of the manufacturing and technology development facility is scheduled to begin this year. The first shipments of solar cells are expected by mid-2009.

SpectraWatt would employ 83 people initially, increasing to 135 workers when production reaches maximum capacity by the end of next year, Intel said.

Hillsboro officials touted the announcement as another feather in their clean-tech cap.

Last Year, Germany's SolarWorld announced that it would renovate an abandoned plant in Hillsboro to make solar cells. The company plans to invest $400 million and employ 350 people by the end of the year -- and 2,000 people eventually. SolarWorld projects that it will be the highest-producing solar plant in North America by 2009.

SpectraWatt's presence will increase Hillsboro's allure as a clean-tech hot spot, said Larry Pederson, the city's economic development director. "It acts to push us to the top of anyone's list."

In addition, two California-based solar manufacturers -- Solaicx Inc. and XsunX Inc. -- are establishing plants in the metro area, Solaicx in Portland and XsunX in Wood Village.

SolarWorld ambitious

SolarWorld is the most ambitious of the Oregon players: By the end of next year, it expects to produce enough solar cells to generate 250 megawatts of electricity and eventually to increase capacity to 500 megawatts. That compares with SpectraWatt's projections of 60 megawatts of capacity.

Analysts called SpectraWatt's size and the $50 million investment "modest."

Still, Intel expects SpectraWatt to thrive in a market that it said should have room for all comers.

The solar-technology market has been growing by more than 30 percent in recent years, said Pernick of Clean Edge, adding that the growth rate should continue. But companies need to find ways to bring the costs of solar energy down, he said.

Solar power remains double the cost per kilowatt of more traditional forms of retail electricity.

In addition to Intel Capital, investors in SpectraWatt include Cogentrix Energy, a subsidiary of The Goldman Sachs Group; PCG Clean Energy and Technology Fund; and Solon AG.

Intel declined to disclose the size of its contribution or whether it held a majority share. The transaction is expected to close by the end of this month.

As a spinoff, SpectraWatt is an independent company, an "optimal structure," Intel said. "At this time, Intel does not have any plans beyond the Intel Capital investment to directly participate in the photovoltaic marketplace."

Intel, headquartered in Santa Clara, Calif., employs 15,000 workers in and around Hillsboro, the largest Intel presence anywhere. Its most advanced chip research is concentrated in Hillsboro, home to a cutting-edge Intel research lab and a multibillion-dollar factory for developing new manufacturing techniques.

Oregonian reporter Mike Rogoway contributed to this story.

Gail Kinsey Hill: 503-221-8590, gailhill@news.oregonian.com For environment news, go to oregonlive.com/environment.