Intel chairman Craig Barrett has warned that Ireland could lose an important element of its competitive edge if it is unable to offer investment incentives comparable to those available in developing countries.

Speaking in Davos, where he is attending the annual meeting of the World Economic Forum, Mr Barrett told The Irish Times that the IDA Ireland had kept Intel informed about its planning application for an integrated circuit plant at Grange Castle in west Dublin.

He declined to confirm or deny that Intel was planning to invest in the new site.

"We speak to the IDA all the time, obviously.

"We're in constant communication," he said.

Mr Barrett said IDA investment incentives were, along with the low corporate tax rate and high educational standards, among the main drivers of Ireland's economic success.

"If you lose the investment incentives, then you start to look maybe like the United States, which has this problem," he stated.

In the United States, the only sort of investment incentives that are present are very local and they aren't the sort that are given in Asia or many of the developing countries in the world.

"So future investment then gets to be a little more problematic," he said.

Intel is expanding in Ireland but also in Israel, China and elsewhere and Mr Barrett said there was virtually no limit to how much high-tech industry could move to the developing world.

"All you have to do is look at the United States as an example. We are still expanding in the US but we're also expanding elsewhere, where the cost-effectiveness of the expansion is better substantially.

"These are very competitive issues."

Mr Barrett said that Ireland's low corporate tax rate remains the most important attraction for companies like Intel, which are very capital intensive but are not labour intensive.

"There are all sorts of things that people can do in terms of training benefits and utilities and land and that sort of thing, but fundamentally taxes are one of the biggest swingers and especially in our particular industry where the capital investments are very large and the paybacks or the profitability associated are rather large.

"If you don't make any money, taxes aren't much of an issue but if you do make money for reinvestment, then taxes are a substantial issue," he said.