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Sent 1: In remarks during a ribbon-cutting ceremony here on Wednesday, Gov. George E. Pataki said he expected the facility to generate thousands more jobs in the Hudson Valley area for contractors and suppliers catering to the factory.
Sent 2: He praised IBM for being "a critical partner in our economic development efforts" in New York state.
Sent 3: In a brief speech, Samuel J. Palmisano, IBM's chief executive, emphasized that it was important to make long-term investments despite the current slump in the technology business.
Sent 4: "To play to win in technology, you innovate and you lead," he said.
Sent 5: But manufacturing technology products is a costly and cyclical business.
Sent 6: In June, IBM announced that it was taking a charge of more than $2 billion against earnings.
Sent 7: The largest single reasons for the charge were the cost of getting out of the business of manufacturing hard disks for storage, which it sold to Hitachi, and closing down some of its older semiconductor operations.
Sent 8: But Kelly said the demand for advanced chips, like those produced at IBM's facility in Burlington, Vt., is strong.
Sent 9: "I need more capacity in that end of the market," he said, "and this is factory is critical to meeting that growing demand."
Sent 10: If IBM has miscalculated the demand, it will suffer badly as both the high operating costs and depreciation on the huge capital investment for the East Fishkill factory drag down earnings.
Sent 11: But industry analysts said the plant should be insulated from a falloff in one or a few segments of the semiconductor market.