Reduced demand concerns Intel staff

STAFF AT computer-chip manufacturer Intel in Leixlip have been told at briefings that demand for new products is not materialising as quickly as expected.

The briefings have caused concerns among staff that this may lead to a possible reduction in activity and staff numbers.

The US company told employees at a series of meetings at its Co Kildare base that the long-term demand for products was not as high as previously expected.

It also signalled to staff that Intel’s manufacturing plants in Arizona and Israel were ahead of Ireland in terms of competitiveness and requirements on costs, skills and capacity as locations for future production lines.

This has led to concerns that 400 to 500 jobs in Leixlip potentially could be affected.

Staff believe the so-called “1270” production line of more advanced processors may now be delayed in Ireland or relocated elsewhere as the Leixlip operation competes with the other Intel facilities internationally for the line.

This has led to mounting fears among staff that the older production lines of products produced by the company’s Fab 10 and Fab 14 facilities at Leixlip will be wound down over time and may not be replaced until later or at all.

A spokesman for Intel’s Irish operations declined to comment on whether it had fallen behind overseas plants within the Intel group in the pecking order of suitability for the location of new production lines.

He also declined to comment on whether the lower demand would lead to any reduction in jobs at the Irish facilities, saying that demand and capacity was continually changing and under review.

He said it was not correct to assume that lower future demand for new generations of products would lead to a reduction in jobs at the Co Kildare plant as this line was not yet in production.

The company would not make any decisions or brief staff further until the fourth quarter of this year or the first quarter of next year. He said there would be “multiple changes in the timeline” for the 1270 line and Ireland was “well positioned” if things changed.

Intel’s policy was to provide “verbal updates” to outline plans.

Intel employs almost 5,000 staff directly and through third parties. The firm’s Fab 10 and Fab 14 factories, known as Ireland Fab Operations (IFO), were built in the late 1980s and make older and lower-end products.

The company’s Fab 24 facility manufactures more recently developed Intel products.

Production in the Fab 14 factory will continue to run for the coming weeks, but the planned refit of the facility in expectation for the 1270 line of processors will be pushed out due to competition among Intel factories internationally.

Intel’s Irish operation has only recently slipped behind the group’s Israeli firm in terms of competitiveness.

Israel has suffered in the global economic slump but has not had to bail out any of its banks. The country plans to cut income and corporation tax over seven years.

Yuval Steinitz, Israel’s finance minister, told the Economist magazine last week: “In five or six years, Israel’s company tax will be lower than Ireland’s. Intel and others will think hard about that when they decide where to invest.”

Earlier this month Intel posted a net loss of $398 million (€282 million) in the second quarter, its first loss in 22 years, but its shares climbed as the results beat investors’ expectations.