When a company announces it is going to cut 11 per cent of its workforce, it is assumed that all parts of the business will feel the pinch. Intel did just that in recent weeks, revealing plans to shed about 12,000 of its more than 100,000-strong workforce as it restructures its global operations.
While the first concerns must have been felt by staff at the Irish operation, the announcement must also have sent a chill down the corridors of State agencies. Intel is one of the largest multinational employers here, with more than 5,000 staff. It has been here for more than 25 years, and indirectly, it is responsible for thousands more jobs. Any significant retrenchment here would have a devastating effect on the local economy in Leixlip, Co Kildare, where the majority of its staff are.
But some signs indicate that Ireland will not suffer as bad a fate as feared. The company recently invested $5 billion (€4.4 billion)in upgrading the plant to prepare it for the next wave of microchip technology.
The company is cutting back on areas that are in decline. Intel doesn’t reveal exactly where the chips it makes in Leixlip go. But some are likely used in servers, which would provide a degree of protection for staff. There will be job losses, but hopefully these will be on a voluntary basis and things will continue.
It would be unwise though to get complacent. The problem is that Intel tied itself to a sinking ship – the PC market – and failed to get an early foothold in the growing mobile industry before rivals such as Qualcomm and ARM did. Despite moving into other sectors PCs still account for more than half of the company's revenue.
However, it doesn’t mean the chipmaker is on the way out. Intel dominates the server industry, which has seen some growth in recent years as data centres have sprung up all over the place.
In its most recent results, Intel said revenue from its data centre group was $4 billion in the first quarter, up 9 per cent year on year. The one thing you can be certain about in the tech industry is that nothing is certain.
