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Intel's Irish facility 'critical' to European operations but energy challenges linger

Fred Chen

Moderator
Updated / Tuesday, 21 Jan 2025 11:50
By Tony Connelly
Europe Editor

Senior Intel executives say the manufacturer's Irish facility will remain critical to its European operation for at least the next seven years, and should not be at risk as the company presses ahead with its global cost cutting drive.

However, Intel remains concerned about the high cost of energy in Ireland when producing semiconductors, relative to other markets such as Israel and the US.

One senior source at the Davos summit told RTÉ News the lower labour costs in Ireland relative to the US are being cancelled out by the higher cost of energy.

The company estimates that in Ireland energy costs are 15 cent per kilowatt hour, around double that in other markets where Intel operates.

It is understood Intel is in contact with the Irish Government to explore ways of reducing energy costs, as well as through the EU Chips Act, in such a way as to comply with EU competition rules.

Intel has suffered significant profit loss in recent years and has fallen behind rivals in the microprocessor market such as Nvidia, AMD and Taiwanese firm TSMC.

Due to the shortage of chips during the pandemic, Intel increased production of its manufacturing plants to meet demand, but the cost of that investment - and the fact that customers were slow to respond - has seen profit margins tumbling.

Intel posted a €16 billion quarterly loss last October, the biggest in its history. Thousands of staff have been laid off worldwide and its chief executive Pat Gelsinger was sacked by the board.

The company continues to design chips as well as manufacture them, with industry analysts saying that may not be a sustainable model.

However, senior executives insist that manufacturing capacity, investment and technology development go hand and hand and will return the semiconductor giant to profitability.

The company says the Irish facility - known as a foundry - in Lexilip in Co Kildare, which employs 4,900 people, will be critical to Intel's manufacturing strategy.

Intel Ireland has been specialising in cutting edge systems to produce so-called wafers, highly sophisticated panels on which individual microprocessors are printed.

The Irish plant produces the Intel 4/3 processing system, part of the so-called EUV Node, which was developed in Oregon but has been transferred to Ireland, meaning Lexilip is the only Intel plant manufacturing such wafers in high volume.

Intel sees this as a major cash producer and margin generator for the company, with production ramping up over the next four to five years in order to serve the European market, according to senior sources.

Officials say that from a space and growth perspective, Ireland will continue to play a major role in the overall factory network.

The company is also developing the new Through Silicon Via product in Ireland which it regards as vital for the Artificial Intelligence (AI) personal computer market, which is expected to expand in the coming years.

However, sources say the Irish operation will have to adapt to new AI training and efficiencies, with a greater focus on technology development and acquiring new customers over high-volume manufacturing.

Senior Intel executives say the energy problem in Ireland is down to infrastructure backlogs in the renewable sector and that the fixed cost of delivering energy from offshore wind farms tends to get passed on to customers.

It is understood the company is exploring ways for the state to take on some of the burden of the fixed cost of infrastructure in order to avoid such costs being passed on to the customer as the infrastructure is being developed.

Sources have said the energy issue is a major challenge.

 
I guess Intel really wants to say is they want more subsides from Irish government.
Irish Govt already lost once when they were letting Apple get away with dodging taxes in the juristictions they were doing business.

A Govt trying to give taxes back to a Company was quite the sight.
 
An Irish senior engineer (grade 7) at intel makes a little over half the wages compared to the equivalent USA intel engineer.

Intel Ireland employee here 😀
Is the cost of living out there at least alot lower than Oregon (not sure if you ever had the oppertunity to SEED out of D1)? Because I know it is kind of a bummer a NM, AZ, and OR engineer all get paid the same despite large cost of living deltas. Then you also got the design and software guys seemingly getting paid a grade or two higher for the same experience.
 
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Energy costs is Ireland are possibly the highest in Europe. Part of this is geography but part of it is within our control i.e. the LNG terminal that was refused permission by previous [same] Govt 🤯

Our Govt's answer to all of this is to subsidise [with our own money] the cost of the consumer's electricity bills :unsure: All of this is possible once our economy continues to boom. And this is possible once US corporations continue to pay huge amounts corp tax here.

We do not tend to address the root cause of problems here unless we absolutely have to. So since we have the money, we will do the easy thing and just provide subsidies to Intel. This is the Irish way 😁
 
Is the cost of living out there at least alot lower than Oregon (not sure if you ever had the oppertunity to SEED out of D1)? Because I know it is kind of a bummer a NM, AZ, and OR engineer all get paid the same despite large cost of living deltas. Then you also got the design and software guys seemingly getting paid a grade higher for the same experience.

I to fell that the cost of living here was higher than the US, Arizona and Oregon but it looks like you guys caught up with this.

This website to pretty good, it compares the cost of living between cities.


It's not possible here to buy a house on your own. Even with a couple on 'good' wages it's near impossible. People seem to had disposable cash at intel USA. People had money for hobbies, working on car projects, a lot of folks had pilots licences in AZ. Here, that's just not possible. If have you money for a few beers at the weekend and to go on vacation with your family once a year you are doing well.
 
Yes ... and the Irish Govt appeal against it.

Say they dont want the money 🤣🤣🤣🤣


There is method to the madness for refusing that 13 billion. A lot of our economy is made up form multinationals that have manufacturing bases here or headquartered here.... For favourable, ahem tax reasons....

They don't want to spook the other multinationals by agreeing with our European overlords and start trying to haul in tax. The companies might up and leave.

If you have Spotify, here is a link to an economics podcast about the situation. This economics podcast is actually fun, hard to imagine .

 
There is method to the madness for refusing that 13 billion. A lot of our economy is made up form multinationals that have manufacturing bases here or headquartered here.... For favourable, ahem tax reasons....

They don't want to spook the other multinationals by agreeing with our European overlords and start trying to haul in tax. The companies might up and leave.

If you have Spotify, here is a link to an economics podcast about the situation. This economics podcast is actually fun, hard to imagine .


Thanks , will have a listen.

Was being a wise-ass , I know why the Irish Govt was doint it , it just looked very funny at the time , appealing a decision to give more tax to the country.
 
There is method to the madness for refusing that 13 billion. A lot of our economy is made up form multinationals that have manufacturing bases here or headquartered here.... For favourable, ahem tax reasons....

They don't want to spook the other multinationals by agreeing with our European overlords and start trying to haul in tax. The companies might up and leave.

If you have Spotify, here is a link to an economics podcast about the situation. This economics podcast is actually fun, hard to imagine .


As the host said, I wish I could have the chance to go to court, admit guilt, and then walk away with $14 billion for doing something so wrong. :)

In my opinion, the revenue generated from hosting multinational companies as a tax haven can be beneficial in the short term. However, in the long run, if the country doesn’t seize the opportunity to develop a robust and diversified economy and industries, this easy money could turn into a curse. It’s similar to the "easy oil money" that has devastated the economies of so many countries.
 
As the host said, I wish I could have the chance to go to court, admit guilt, and then walk away with $14 billion for doing something so wrong. :)

In my opinion, the revenue generated from hosting multinational companies as a tax haven can be beneficial in the short term. However, in the long run, if the country doesn’t seize the opportunity to develop a robust and diversified economy and industries, this easy money could turn into a curse. It’s similar to the "easy oil money" that has devastated the economies of so many countries.

Singapore in this position now.

Many MNC here off the back of attractive policy to create some jobs.

I dont think anything has transpired into nurturing any local talent.

In fact I think its got worse , as the deals with MNC run out , they start moving "non-critical" roles out of Singapore to cheaper locations
 
There is method to the madness for refusing that 13 billion. A lot of our economy is made up form multinationals that have manufacturing bases here or headquartered here.... For favourable, ahem tax reasons....

They don't want to spook the other multinationals by agreeing with our European overlords and start trying to haul in tax. The companies might up and leave.

If you have Spotify, here is a link to an economics podcast about the situation. This economics podcast is actually fun, hard to imagine .

Thanks for the link to this guy.

Very good , some good listening on many topics
 
As the host said, I wish I could have the chance to go to court, admit guilt, and then walk away with $14 billion for doing something so wrong. :)

In my opinion, the revenue generated from hosting multinational companies as a tax haven can be beneficial in the short term. However, in the long run, if the country doesn’t seize the opportunity to develop a robust and diversified economy and industries, this easy money could turn into a curse. It’s similar to the "easy oil money" that has devastated the economies of so many countries.

I fear we are too far down that patch. When the house off cards fall, we can't stand on our own feet.
 
Thanks , will have a listen.

Was being a wise-ass , I know why the Irish Govt was doint it , it just looked very funny at the time , appealing a decision to give more tax to the country.

It is funny in a way, though so many here don't understand the reasoning for our prosperity.
 
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