Intel boss warns Bertie – ‘watch the costs’

15 Jun 2004

The CEO of Intel, Craig Barrett (pictured), indicated to Taoiseach Bertie Ahern yesterday that while Ireland’s economy should continue to grow, the country must keep the costs of doing business and living in Ireland reasonable. Barrett was speaking at the opening yesterday of Intel’s Fab 24 chip plant in Leixlip, which represents an investment of up to US$2bn.

The new Intel plant will be manufacturing Intel’s latest processors using the chip industry’s most up to date 300mm silicon wafer, 90 nanometer technology.

Addressing workers and dignitaries yesterday, Barrett recalled Intel’s first presence in Ireland in 1989, in a tiny car salesroom in Palmerstown in Dublin. Since then, Intel’s presence in Ireland has grown to incorporate Fab 10, Fab 14 and lately Fab 24, employing 3,480 full-time employees.

Last month, the company revealed plans to invest a further €1.6bn in new wafer fabrication cleanrooms for the production of the next generation of 300mm wafers using 65 nanometer technology. The investment, which will bring total investment by Intel in Ireland to almost €7bn, will secure long-term employment of the company’s existing 4,700 direct and indirect workforce in Ireland and will bring the total number of employees and contractors to over 5,000. The new chips that will be manufactured at Leixlip will be smaller, faster, use less power and have more functionality than those currently produced. Construction of the facility will begin immediately, with production of the new chips beginning mid 2006.

Barrett said: “This is one of the most modern and cost-effective technology plants in the world. We will be creating integrated circuits of 300mm silicon wafers with 90 nanometer topographical technology. Every two years we upgrade our facilities here and envisage improving that to 65 nanometer technology. When I began in the semiconductor business, we boasted about placing 1,000 transisters on a silicon wafer. By next year we will be placing over two billion transistors on a single wafer. This trend shows no sign of slowing down.”

However, while praising the partnership that has existed between Intel, IDA Ireland and the Government for the past 15 years, Barrett warned Taoiseach Bertie Ahern: “We are looking forward to the next 15 years. However, I would urge you not to be too successful with the economy in terms of rising costs.”

At a roundtable briefing for journalists later in the morning, Barrett qualified his remark by explaining the company’s criteria for investment. “We look at cost from different directions. Labour cost is certainly on the list as is the depreciation of equipment in a building. Labour cost is not as important to us as corporate tax, plant machinery and building contracting.

“At present, construction costs in Ireland are on a par with the US and labour costs are reasonably close to the US. But we also rate government co-operation as very important.”

To highlight the importance of managing an economy’s costs, Barrett highlighted the State of California in the US, which was once the centre of the global technology industry. “California effectively priced itself out of the competition in terms of costs of living, doing business and property. It got so bad that they effectively threw their governor out. It can happen.”

Barrett warned that if Ireland, or any world country, wishes to remain competitive it would have to continue to invest heavily in education, research and development and ensure that emerging infrastructure such as roads and telecommunications are up to the task.

By John Kennedy