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.
www.rte.ie
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.

Intel's Irish facility 'critical' to European operations
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.