Intel to miss job target in Leixlip due to market difficulties

Intel will not meet its target of creating 1,000 new jobs at its Leixlip plant by 2004 due to continued difficult conditions in the global computer chip market,  writes Jamie Smyth, Technology reporter.

The world's biggest semiconductor firm is now unlikely to reach its target until 2006, despite bringing its new Fab 24 chip-making plant into production in the first half of 2004.

Construction of Fab 24 was halted by Intel for almost a year in 2001 due to the downturn in the technology sector. The restart of construction work was announced by the Tánaiste, Ms Harney's Department, in the run-up to the general election last year.

Mr Jim O'Hara, Intel Ireland's general manager, said yesterday it was a fluid situation and the firm would expand its workforce to meet market demand.

"We continue to be flexible with these variables to ensure competitiveness. We have to make sure there are not excess numbers of people in years to come," Mr O'Hara said in an interview with The Irish Times.

Intel confirmed yesterday it has hired 300 new staff and reassigned 300 existing staff to work on its Fab 24 project, which will introduce cutting edge chip making technology to Leixlip.

But overall job numbers at the firm's Leixlip operations have increased by just 50 people since the Fab 24 expansion was first announced in June 2000. This is due to some voluntary redundancies and staff leaving of their own accord from the firm's two other fabrication plants, Fab 10 and 14.

Mr O'Hara said he still hoped Intel would increase employment at its site but given market conditions the firm had as many staff as it currently needed.

"We don't know what the variables are. It depends on how fast we ramp up Fab 24," he added.

In a statement yesterday, Intel said it had driven a lot of efficiencies and productivity increases to maintain its competitive position. This had enabled it to operate with fewer people over the past two years during the downturn.

Under Intel's Fab 24 deal with IDA Ireland, the firm committed to hiring an additional 1,000 staff at its Leixlip site and has already received €54 million grant aid.

An IDA spokesman said the grant payments were allocated for capital construction and were not employment grants. He said the agency was not concerned about Intel meeting its own recruitment targets for Fab 24.

Mr O'Hara, who was appointed Intel Ireland general manager last year, also expressed concern about the rising cost of doing business in the Republic and the strong euro.

He said construction was now cheaper in the US than the Republic and continual price erosion was undermining competitiveness.

"The exchange rate is definitely significantly eroding our \ competitiveness from an overall headcount perspective," he said. "We pay a large proportion of overall costs in euro denominations and this has implications for us."

Mr O'Hara said the firm would continue to attack all aspects of variable costs and become more efficient. This would include a major review of all Intel's suppliers, including utilities, he said.