Intel’s vote of confidence

Intel, a US multinational that makes semiconductor chips for the electronics industry, has marked its 25th year in Ireland, by making a $5 billion (€3.6 billion) investment in its Leixlip plant. This is the single largest private sector investment in the State's history. And Intel's decision to upgrade its plant represents a huge vote of confidence both in the skills of its Kildare workforce and in the strength of the Irish economy.

It ends months of speculation about the company's future at Leixlip, where some feared its operation might be scaled back. Later this year Intel Ireland is to begin producing a new generation of products for the electronics sector.

Intel, when it first located here in 1989, was purely a manufacturer of microchips. Over the past quarter century Intel Ireland has become increasingly involved in research and development. This requires employees with high-level education skills, who help to generate greater added value for the company. For the IDA, attracting Intel to Ireland represents one of its greatest achievements in attracting foreign direct investment (FDI).

To date Intel has invested $12.5 billion (€9 billion) in its Irish operations, with the latest expansion securing the future of its 4,500 employees at Leixlip, and with a further 5,000 – construction workers and others – engaged in the upgrade work. However, Intel has become more the exception than the norm in the multinational technology sector in Ireland where most work in sales and customer support and far fewer – an estimated 10-15 per cent – are engaged in engineering and product innovation.

Nevertheless at a time when, in a slow growth global economic environment, competition between countries to attract FDI has intensified, and when Ireland’s future ability to win its share may well be hampered by uncertainty surrounding the reform of global corporate tax, much more emphasis needs to be placed on encouraging domestic investment. Taoiseach Enda Kenny has frequently talked about making Ireland “the best small country for business, by 2016”. But, the Government has yet to set out how to achieve that .

To many observers, it would seem, the needs of foreign companies, whether existing or potential investors, are readily facilitated while the concerns of domestic companies receive far less attention. One of Ireland’s few globally successful tech entrepreneurs, Chris Horn, while readily acknowledging how much the Government has done with tax policies to encourage FDI, has also pointed out how little those policies have done to encourage domestic entrepreneurship. Capital gains tax for entrepreneurs at 10 per cent in Northern Ireland and 33 per cent in the Republic, is not designed to encourage risk-taking in the latter, and remains a major obstacle in the way of Mr Kenny realising his economic ambition for 2016.