Intel warns ‘Ireland needs to lower costs to win investment’


20 Jul 2009

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Intel confirmed this morning that a briefing with staff took place at its Leixlip plant in Co Kildare last week, where staff were told demand for the 300mm-based chips are not materialising as expected and this will is having some impact on its longterm product roadmap.

The company, which employs 5,000 people in Ireland, will have a clearer picture of the situation by Q4 of this year or by Q1 of next year.

Staff were told that Ireland is battling against other locations where Intel has operations such as Israel and the US, and unless the country gets its costs in line – especially in terms of energy costs – it will be unable to compete with these countries to win investment projects to replace the older 200mm product lines.

“We highlighted to staff that demand hasn’t materialised as quickly as previously expected,” a spokesman told siliconrepublic.com. “We are trying to predict a market that is three years out. It is our core philosophy to keep staff informed and updated. The signals we are getting from our sales forecasts are we need to tweak the plan.

“Demand wasn’t emerging as expected from these forecasts. We decided to let people know that this isn’t just an issue for Intel in Ireland, but it is for particular products and time sets.”

The spokesman added that as well as Fab 10 and 14, Intel manufactures the more-advanced 300mm-based processors, including the Canmore chip that will power future TV sets, as well as several other key divisions, such as research.

“The fact of the matter is the older 200mm technologies are coming to the end of their useful life and there aren’t that many customers left for those products. The key is repurposing ourselves; identifying a new transition path and winning new investment is vital.”

The spokesman said that it was inevitable the 200mm technologies, which have been made in Leixlip since 1991, would come to the end of their life at some point. “It’s a moving target influenced by sales targets. When new data comes in it changes parameters.”

He explained that every Intel location in the world competes for new business, and for Ireland to win business that will replace 200mm technologies the country urgently needs to tackle competitiveness.

“If Ireland gets its costs in order, stays competitive and with the incentives it offers, there is no reason whatsoever why it can’t compete for new investment. Intel has a massive investment in Ireland. We reached a new data point and we verbally communicated the update to our employees as is our company commitment.

“We need to continue to focus on the things that made Ireland competitive 10 years ago when it was hungry for business and was lean and competitive. People must realise that there are multiple businesses on this site and that at any time two or three of those businesses will have ups and downs,” the spokesman explained.

“Ireland is a very important part of the Intel network worldwide and will continue to be. We have the investment on the ground, we have the skills and workforce in place. We just need to tighten up on costs and ensure we are competing for every new investment.

“Energy costs in Ireland are a massive worry for us,” he added.

The spokesman also said that crucial factors such as a ‘yes’ vote in the forthcoming Lisbon Treaty referendum will be closely watched by Intel management in Santa Clara, California: “This is not just Intel; every multinational in Ireland will be watching the Lisbon vote. It will affect how Ireland continues to be perceived internationally.

“Intel will want Ireland to be at the heart of the EU. A ‘yes’ vote would send out clear signals to decision-makers in Santa Clara, Boston and Seattle that Ireland is still at the heart of Europe.”

By John Kennedy