A palpable air of optimism is creeping into the board rooms of US multinationals working in the technology sector for the first time in a long time.After three years of declining earnings, job cuts and retrenchment, corporate America is again beginning to open its wallet and invest in new plant and technology equipment.

That's good news for Irish firms selling into the US and for the 130,000 staff working for foreign firms here.

EBay, IBM and Merill Lynch have all announced multimillion euro investments recently and Intel's announcement of a €1.6 billion investment this week understandably energised the sector.

"Intel is very important for Ireland especially because of all the talk about our competitiveness ," says Mr Gerry Hennigan, technology analyst with Goodbody Stockbrokers.

"It is a very significant and long-term investment."

Goodbody's is predicting that Intel's decision to build a new fabrication plant could spur other investments in the technology industry.

It may also lift Ireland's 2005 forecast GNP growth rate by 0.5 per cent to 4.5 per cent.

It should also build confidence among other firms that are considering expanding their Irish operations, says Mr Hennigan.

If IDA Ireland is to achieve its goal of making 2004 its best year since 2000, the state agency will have to hope this confidence translates into new projects.

Just 2,200 new jobs have been created so far in 2004, well short of the 9,182 jobs announced last year.

"I'd be a lot more positive now than I would have been a year ago," says Mr Joe Macri, managing director of Microsoft Ireland, which employs 1,200 full-time staff at its European headquarters in Dublin.

"All the leading indicators, such as PC and server shipments, are up and you just have to look at IBM, Microsoft and HP's results to see business is good."

This better business climate is at last translating into new jobs in the US and expansion abroad.

A survey published by PricewaterhouseCoopers this week suggests 46 per cent of US firms plan to increase their workforce this year.

Companies expect to add an average of 4.4 per cent net new hires. Of these new jobs, 3.3 per cent are expected to be in the US, and 1.1 per cent overseas.

IDA Ireland will be competing to grab as many of these jobs as it can. And, according to Mr Macri, Ireland is a competitive place to do business which continues to punch above its weight in attracting foreign investment.

Partners in Prosperity, a report on the transatlantic economy by Mr Daniel Hamilton and Mr Joseph Quinlan, of Johns Hopkins University, found that US investment in Ireland in 2003 was more than two-and-a-half times greater than American investment in China.

Profits of US firms in Ireland in the same year surged by 45 per cent, concluded the report.

So what is the secret of Ireland's continued success?

Mr Jim O'Hara, Intel Ireland's general manager, pinpoints a combination of a highly skilled workforce, tax policy and Government support for the technology industry. But he also acknowledges that stability is an increasingly important factor due to global geopolitical risks.

Indeed, few analysts are predicting that Intel will locate crucial parts of its operations to its other non-US site, Israel.

"Intel is one of those 'Made in America brands' and would be conscious of locating in a stable environment, says Goodbody's Mr Hennigan, who believes US firms are a target for terrorism.

IDA Ireland does not use this factor in its negotiations with US firms, says Mr Eamonn Ryan, executive director of IDA Ireland. But he admits it is undoubtedly a factor in the background.

Mr Ryan says that the IDA pipeline of potential investments from US firms is now stronger than it has been since 2000.

"At any one stage we are talking to between 30 or 40 US firms, and we are coming to a final conclusion in 10 to 12 of these cases," he says.

"The potential projects represent a mix of research, headquarters and internet projects... they are very different to what we were negotiating even three years ago."

IDA Ireland has radically changed the type of projects it is chasing and is now promoting the State in the US as a knowledge economy, according to Mr Ryan.

Recent innovations such as tax credits on research and development investment and changes to the rules regarding corporate headquarters are helping Ireland.

"Word is spreading that Ireland is a good place to do research and projects like Intel and the recent IBM investment are showing US firms this is the place to be," says Mr Ryan, who is now in the US talking to firms.

One key firm, which is close to choosing Ireland as a centre for its European operations, is the online retailer Amazon.com. The firm is in talks with the Government and internet data centres in Dublin about setting up a customer and administrative centre.

Unsurprisingly, the company would not comment on the potential project when contacted.

But many projects that are signed by the IDA are never announced, according to internal IDA figures, seen by The Irish Times.

These show that just 14 of 24 projects signed up by the development agency have been formally launched. IDA sources say there are a number of reasons for not announcing the projects, including commercial sensitivities.

But currently political sensitivities are causing US firms to be shy about creating jobs abroad.

The US media and politicians are increasingly focusing on an "offshoring debate" during the presidential election campaign. Stung by the movement of hundreds of thousands of jobs to low- cost countries such as India and China, opinion has swung against US firms investing overseas.

It is possible this could affect Ireland's ability to attract high profile projects.

There is also a danger that a new US administration may introduce tax penalties for firms locating overseas, although many business people do not think this will happen.

"The prevalent mood in the US at the moment is to keep jobs at home and it is clearly linked to the election," says Ms Joanne Richardson, chief executive of the American Chamber of Commerce Ireland.

"But in the end companies will make decisions purely on business criteria."

Ms Richardson also highlights that most of the high-profile job losses in the US are low volume jobs that migrate to India or China.

In comparison, the new projects coming to Ireland tend to be higher value investments.

The IDA and the Government are also promoting Ireland as a "near shoring" hub for US firms in an attempt to offset criticism about taking jobs from the US.

"People talk about the balance of trade and it must be remembered that US firms do business in Europe," says Mr Ryan.

"We want to market Ireland as a vital part of the US firm's business, not just a cost saving measure."

Intel obviously agrees with the strategy, and the IDA will hope other US firms follow its lead.