Chairman says Intel does not move countries to save costs

Intel chairman Craig Barrett has said it is not the company's practice to switch manufacturing operations to other countries so as to make savings on labour costs. Colm Keenareports.

Intel employs 5,500 people at its plant in Leixlip, Co Dublin. Mr Barrett said low corporation tax rates and the availability of "brain power" were the two reasons why the company had its operation in Ireland.

In a TV interview in the US, Mr Barrett said Intel's manufacturing operations were more capital intensive than labour intensive, and so the cost of labour was not such an issue.

He said because of this the company would not get major savings by shifting its manufacturing locations. However, such moves could raise a risk that "a glitch for a short period of time" could arise and "you lose a ton of money".

"If you can roll your workforce over to the next generation of technology and be assured with a highly-trained workforce, you are not going to have any glitches in the next generation ramping up rapidly, that's a much better deal than taking a flying bet on some country."

Mr Barrett said most of Intel's manufacturing was in the US and would remain there, because of the infrastructure and the brain power that was available.

"We do have facilities in other countries, but Ireland is not a low labour [ cost] country and Israel is not a low labour [ cost] country."

Asked if Intel was in these locations because of their "intellectual fire-power", Mr Barrett replied "yes", and then continued: "Ireland has a low corporation tax rate and Israel provides incentives, because there are some, you know, political uncertainties in Israel, and so they're very aggressive about attracting investment."

He said Intel went to Israel 25 years ago when it was capital poor and needed help in building its next manufacturing facility. "So there are historical reasons why they're in those spots, but they also have a lot of brain power as well, which helps us out."

The Leixlip facility is capable of manufacturing 65 different Intel products - three times as many as any similarly equipped Intel factory in other parts of the world.

In the interview Mr Barrett said there was very little IT manufacturing in California and that Intel did most of its manufacturing in the US in Oregon, Arizona, New Mexico and Colorado.

Intel is the largest microprocessor manufacturer in the world.