Computer giant Intel may not restart construction on a flagship $2.2 billion extension to its Irish plant this year. The US firm is also seeking to reduce the cost of the project by renegotiating building contracts agreed during the construction boom, a senior Intel executive said yesterday.
The proposed $2.2 billion extension represents one of the State's biggest technology investments. It would create an extra 1,000 jobs at Intel's Leixlip plant, which already employs some 3,150 hi-tech workers.
In an interview with The Irish Times yesterday, Mr John McGowan, director of Intel's worldwide corporate services group, said restarting construction was dependent on business conditions.
But he also indicated there was no guarantee Intel would restart construction this year and said the firm was looking at other options for capital expenditure in 2002.
"In itself, there is enough headroom for us to complete the project in Ireland if we decide that it is the appropriate place to spend our capital," he said. "We would be looking at other options to spend our money, perhaps on re-equipping or changing the tool-set mix in our existing factories."
This week Intel cut its capital expenditure budget for 2002 to $5.5 billion, a reduction of almost $2 billion on the previous year. This is likely to make it more difficult for big projects to receive the go ahead at corporate level.
But Mr McGowan said the Leixlip project, which has been delayed twice since it was first announced in June 2000, would go ahead. It was a question of timing, he added.
"A major capital investment like this is a liability if it is not fully utilised so we have to take ultimate care in the present uncertain economic times to make sure that we are reasonably confident that business conditions in 2004 will warrant its construction."
The proposed extension to Intel's Leixlip plant would house the latest technology used in the manufacture of computer processors. The introduction of 90 nanometre and 300 mm technology would enable Intel to manufacture computer processors much more efficiently.
However, it would require an increase in the demand for its processors from personal computer makers to justify the multi-billion dollar investment. This is difficult to predict due to the current difficult economic conditions and the first drop in PC demand for more than 15 years last year.
Mr McGowan denied he had ever set a date of March or April for the resumption of the project. "Everything depends on the strength of the recovery this year," he said.
However, three months ago, a spokesman for the company said Intel expected to restart construction on the plant by March 2002. It is understood that, until this week, IDA Ireland executives expected a decision on the Intel plant by the end of June.
Mr McGowan, who is responsible for all Intel's global building projects, also revealed that Intel was in negotiations with building contractors and was seeking to reduce the cost of its contracts. "In our negotiations with the contractors we have got to get a competitive price that reflects the slowdown in the construction market in Ireland but also benchmarks with construction costs in other countries. We cannot allow costs that applied at the peak of the boom to be carried forward."