When Manassas-based Dominion Semiconductor LLC said last week that it would expand its operations here, excitement wasn't the only thing expressed by economic development officials. There was also a sigh of relief.

For three months, since International Business Machines Corp. sold its share of Dominion to venture partner Toshiba Corp., workers and local officials have held their breath waiting for Toshiba to decide the fate of the operation.

"It certainly diminished a certain level of anxiety we had when we first learned the new partnership with IBM and Toshiba was to be dissolved," said Roger Snyder, director of community development for Manassas.

The recent Toshiba decision to begin production of high-density gigabit flash memory chips at Dominion will mean 250 more jobs and a large addition to its Manassas facility.

"We're very delighted, we think it's very positive news, [especially with the] increased employment," said Manassas Mayor Marvin L. Gillum (R). "It's just a very good plus for this area and for this city in particular.

Company officials characterized the decision as a vote of confidence in Dominion's business.

"We view this as the first dividend of Toshiba buying out IBM," Mark Holcomb, Dominion's spokesman, said last week. "It's good news."

Dominion will manufacture flash memory chips for a newly formed joint venture company to be formed early next year by Toshiba--Dominion's parent company--and SanDisk Corp., a technology company based in Sunnyvale, Calif.

The new chips will be about four times as dense as D-RAM chips, the most common type of computer memory Dominion now produces. Flash memory chips, which often are used in cellular telephones and digital cameras, allow computers and other devices to hold information when they are turned off.

The production of the new chips will make up about 50 percent of Dominion's total manufacturing, Holcomb said. And by 2002, the flash memory production of the Manassas venture is projected to have annual sales of $1 billion, according to Toshiba officials.

The official production of the new chips will begin in 2001. In the meantime, Dominion will be preparing for the production by choosing and installing the new machinery, getting the product "qualified and running," and hiring about new employees to get the production going, Holcomb said.

Company officials at both SanDisk and Toshiba warned that during the equipping, startup and production phase of the Dominion preproduction, the output will be insufficient to cover expenses. Because SanDisk's expenses at Dominion will be greater than its immediate earnings, its productivity and profits might be under expectations at first.

The new jobs eventually will bring the plant's total employment to more than 1,200, officials said. Dominion currently employs 900.

In addition to the new jobs, the expansion is providing some high-tech bragging rights for economic development officials striving to bring more such business here.

"It brings another company in to see Manassas as a fertile high-tech center, along with [seeing] all the Internet activity that is occurring here," Snyder said. "Not only is it a measurable benefit of dollars, but there's the additional benefit of an even better worldwide reputation as a place for leading edge technology."

Before the chip announcement, Dominion had planned to invest $1.7 million in plant improvements. Now, the company expects to invest as much as $2 billion--about $400 million on the building and $1.5 billion in new machinery--in the plant's "Mod 2" facility where the chips will be made.

"It will make this a very busy year for us," Holcomb said.

CAPTION: Dominion Semiconductor, on Route 28 in Manassas, will expand operations next year to manufacture gigabit flash memory chips.