Why Ireland is well positioned to capitalise on chip ‘gold rush’

23 Aug 2023

Image: © Dan74/Stock.adobe.com

The semiconductor industry is set to double by the end of the decade. IDA Ireland’s Dónal Travers looks at how Ireland can ride the wave.

The semiconductor sector has been a critical industry for Ireland for almost 50 years now. Back in 1976, Analog Devices founder Ray Stata decided that Limerick would be the base for a new manufacturing centre.

Then, the late Maurice Whelan founded Silicon & Software Systems – later known as S3 Group – in 1986 in Dublin. This was quickly followed by Intel’s decision to locate its first wafer fab outside the US in Leixlip in 1989. Having such heavy hitters set up shop on this small island signalled to the world that Ireland was well and truly punching above its weight when it came to electronics talent, design and manufacturing.

Fast forward to present day and the country still boasts an impressive arsenal in the semiconductor space. Earlier this year, Analog Devices announced a €630m investment in its Limerick campus, while Intel announced a pan-European investment in 2022, which included Ireland.

But the global focus on semiconductors has spiked in recent years, through geopolitical challenges, components shortages and increased investment in emerging technologies that require semiconductors. And with the industry set to reach $1trn by 2030, Ireland must consider whether or not it’s ready to face the challenges ahead and capitalise on the wave that’s coming.

Dónal Travers is the head of technology, consumer and business services at IDA Ireland. He said that in an industry recognised for its cyclicality, the chips sector in Ireland has never been stronger, and it’s not just because of major manufacturing players.

“In the chip design sector, Qualcomm is investing in a world-leading centre of excellence in its state-of-the-art building in Penrose Dock, Cork, where it continues to recruit for roles in the application-specific integrated circuit areas of digital, analog, machine learning, automotive, CAD, automation, system validation, advanced design for new technologies and software engineering,” he told SiliconRepublic.com.

“Qualcomm join other leading chip designers and automation tool vendors, including Analog Devices, Cadence, Synopsys, Siemens Mentor Graphics, Infineon, OnSemi, ARM, Meta, Qorvo and Renesas.”

Challenges for growth

While it’s clear from the country’s track record that Ireland could capitalise on the global growth at play, the competition has been heating up. “There is something of a gold rush happening today, where countries are actively bidding to attract the world’s leading companies to build research and development, manufacturing, and back-end process capacity,” said Travers. “This means that smaller countries like Ireland have to fight harder to ensure that our capabilities are well understood.”

The explosive growth of the semiconductor industry also poses capacity challenges for Europe. While the EU recently adopted its long-awaited Chips Act, which aims to increase the region’s share of global chip production to at least 20pc by the end of the decade, the continent will need to rapidly increase capacity across construction, fit-out and operation of wafer fabs. This is a highly specialised task, but one that Ireland has experience of, which could give it an advantage.

Another challenge, according to Travers, is talent. The availability of electronic engineering talent is constrained across the globe and could be seen as a significant challenge for all countries.

“Lastly, the manufacturing sector is resource hungry – with requirements for land, materials, water and energy all at scale. The industry is making huge strides, but more will need to be done,” he added.

“We continue to work with industry partners across the ecosystem to ensure that the country is well placed to secure new investment, from both existing clients and target companies.”

When new manufacturing investments are looking for a home, there are several key factors high on their list of priorities, including a strong track record, a healthy talent pool, larger-than-normal manufacturing sites with expansion capabilities and significant resources at stable price points.

“As a country that is one of the world’s most successful at attracting foreign direct investment, Ireland has always scored well on these metrics,” said Travers. “In the future, however, we will need to continue to invest to upgrade the country’s carrying capacity to maintain that successful strike rate.”

Feeding the wider ecosystem

It’s not all about attracting investment and companies to the country. Ireland needs to feed into a much broader semiconductor ecosystem, not just with manufacturing capacity and talent, but with research and development.

University College Dublin’s Prof Peter Kennedy said universities in Ireland have an obligation to engage in early-stage research.

“10 years ago, IDA and Enterprise Ireland funded MCCI, the microelectronics centre that focuses on industry-focused research and training circuit designers,” he told SiliconRepublic.com.

“By facilitating connections with industry and providing design tools and mentors for students and early career researchers, MCCI has played a pivotal role in nurturing the circuit design ecosystem in the universities. It has also acted as an extremely effective focal point for inward investment into the sector. This needs to continue.”

Tyndall National Institute’s Dr Giorgos Fagas also talked about the need for R&D investment in order to stay on top in the semiconductor race. But while competition between countries is inevitable, there also needs to be international collaboration to ensure a strong sector across Europe as a whole.

In 2021, Ireland signed the Joint Declaration on Processors and Semiconductor Technologies, an agreement to work with 21 other member states to bolster Europe’s processor and semiconductor ecosystem that ultimately led to the EU Chips Act.

“The willingness to support cross-border collaboration in Ireland also led to the commitment by Analog Devices earlier this year to invest €630m in Limerick under the Important Projects of Common European Interest framework,” said Travers.

“This groundbreaking investment will result in a substantial increase in Analog’s engineering talent base in Ireland, will see the company work with other leading European companies to achieve common technology goals, and will see a near doubling of its manufacturing footprint in Limerick.”

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Jenny Darmody is the editor of Silicon Republic