Rockwell to Expand Chip Operations : Computers: Company is expected to announce today that Newport Beach site will get the new work.

Rockwell Corp. is expected to announce today that it has chosen Newport Beach over Colorado Springs 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 the 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.

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

Telecommunications 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, the company’s telecommunications division 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 executives 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.

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, Decker said.

He said that Orange County and the city of Newport Beach agreed to “fast track” planning and inspections, and that the city has been asked about tax incentives, although nothing has been agreed upon.