It sounds churlish to see a €12 billion investment as some sort of consolation prize. Yet that is what the decision by Intel, announced this week – to continue with its current plans for its Irish operations while looking elsewhere for landmark new investment – feels like.
The US chip giant plans to spend $88 billion (€80 billion) over the next decade building new operations in Germany, Italy, France, Spain and Poland. It comes in addition to ambitious spending plans on two new US sites.
In Ireland, it is investing €12 billon but that money is simply footing the bill for the completion to the Fab 34 manufacturing plant that is already under construction. It will double the manufacturing capacity available in Ireland.
Wider context
Intel's announcement needs to be assessed in the context of the European Union's new-found awareness of the need to wean itself off a dependency on Asian factories for chip production. Supply chain disruption triggered by the Covid pandemic has undermined the "just in time" model of modern European manufacturing.
Pat Gelsinger, the company's chief executive since last year, says both the US and the EU have lost out on chip production in recent decades because of heavy subsidisation of the industry by Asian countries.
It is roughly 30 per cent to 40 per cent cheaper to build in Asia, he said, adding that the recently framed EU Chip Act and the US Chips Act, which, between them, propose incentives of up to €90 billion, " are designed to essentially level that playing field".
Project commissioned
The US accounted for nearly 40 per cent of the world’s chip production in the 1990s, with the EU responsible for more than 20 per cent, according to reports. That has since dropped to 12 and 9 per cent respectively, said Mr Gelsinger.
He aims to raise those figures to 30 and 20 per cent over the next decade at a time when an ever wider array of products requires such chips.
All very commendable but the fact remains that the investment announced for Ireland is to finish out a project commissioned before the Intel boss took over his role, not as a key player in his ambitious expansion plan.
It is too early to say whether Ireland will continue to be a core part of Intel's business in Europe over the coming decades or not. But when it comes to chip technology, when you're standing still, you're going backwards.
For all that continued investment here is welcome, IDA Ireland and the Irish technology sector will be looking to see the company include its Irish footprint when it comes to further investment in next generation chip technology.
