It may no longer be the case that when Intel sneezes the Irish economy risks catching a cold, but a dose of the sniffles cannot be ruled out. The Santa Clara, California-based company has been making microprocessors, or computer chips as they are more commonly known, in Leixlip since 1989 and has invested over €30 billion here to develop an advanced industrial campus with over 4,900 employees.
Intel’s steady expansion is synonymous with the transformation of the Irish economy and its development into a location of choice for multinationals, particularly American ones, in the technology sector. Where Intel came, others followed.
So, when the company announces that it is planning to cut jobs and investment, Ireland needs to pay attention. Intel surprised the market last week when it said that 15 per cent of its workforce – around 15,000 jobs – are to be laid off and capital spending to be cut by 20 per cent as its ambitious turnaround plan falters.
The company has lost ground in recent years to other chip manufacturers and is reinventing itself in part as a maker of chips for other companies. A massive investment in new factories has yet to pay off and its weakness in the area of chips designed to support artificial intelligence, along with a decline in PC sales, has hurt its bottom line.
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Last week’s announcement is more about stopping than addressing these fundamental challenges so what it means for the Irish operation is not clear. It is unlikely to escape the cuts given their scope and scale. The planned sale of a 49 per cent stake in the Irish plant to investors, announced recently, is another factor in the mix.
Ireland’s success in attracting other technology companies here – often using Intel as part of the sales pitch – means that the economy is not as vulnerable as it might once have been. But any scaling back will have ramifications beyond Leixlip.
At a more strategic level, the question is whether Irish industrial policy is positioned to take full advantage of the technological step change brought about by the advent of AI.