Intel executive urges State to tackle energy costs

Ireland has to look at its infrastructure and competitiveness, executive says at Davos

A top executive at Intel, one of the largest multinational employers in the Republic, has urged the Government to look at ways of tackling soaring energy costs in order for the State to remain competitive in the international hunt for foreign investment.

Speaking to The Irish Times at the World Economic Forum in Davos, Intel’s chief operations officer and head of manufacturing, Keyvan Esfarjani said that the US chipmaking giant has seen its energy costs in Ireland, currently its main European manufacturing base, rise sharply at a time when power inflation remains more muted in the group’s home market.

Irish electricity prices were already 26 per cent higher than the European Union average in the second half of last year, according to Eurostat, before the cost of gas, used for more than half of Irish electricity generation as of last month, soared in the wake of the Ukraine war.

Price caps

Mr Esfaranji said “we are hoping” the Irish Government looks at ways to tackle soaring energy prices. He declined to give specific ideas.

Earlier this month, the Spanish and Portuguese governments approved caps on the price of gas used for the generation of electricity, amounting to the boldest moves to date by EU countries to rein in soaring energy bills.

It followed several weeks of negotiations between both countries and the European Commission, which acknowledged that the two Iberian countries have exceptional energy requirements as it allowed common market pricing rules to be waived there. Both have relatively little interconnection with wider European energy supply.

EU officials also highlighted the Republic and Cyprus as the only two countries in the union with no connections to the mainland European electricity grid, as the commission approved in principle the introduction of limited price caps for power plants that use gas and coal to generate electricity in “regions with very limited interconnection capacity”.

Intel, which employs about 4,900 people at its campus in Leixlip, Co Kildare, decided in March to set up two new large semiconductor sites in Magdeburg in Germany under an €80 billion plan to boost chip manufacturing in Europe. It comes amid subsidy-fuelled efforts by EU and US policymakers to win back chip-making market share from Asian countries, who now account for 80 per cent of output. Intel is also planning a mega plant in Ohio.

Operations

IDA Ireland had pitched a site in Oranmore, Co Galway, against Magdeburg and eight other short-listed European locations vying for the new investment. Concerns over Irish energy and water infrastructure and planning system, amid a rising number of judicial review cases being taken against planning decisions, were reported at the time to have counted against the Republic.

Still, Intel committed in March to investing a further €12 billion in its Irish operations, in a move that will bring to €30 billion the total invested here since 1989. The additional money is being used to develop its so-called Fab 34 facility in Leixlip, bringing total in the project to €17 billion. It will result in Intel’s total workforce in the Republic ultimately rising to about 6,500.

“Ireland is one of the crown jewels of our operations. You’re hearing this from the guy running our entire manufacturing,” said Mr Esfarjani. “Our commitment to Ireland goes more than three decades. The mega scale that we have essentially achieved there, with a world-class operation, is a role-model example for Intel.”

He added that selection of Magdeburg was in line with the group’s strategy of “balancing our overall supply across the network”.

“We have been very happy with what Ireland offers. But Ireland, like every other location, has to continue to look at its infrastructure and its competitiveness,” he said. “Ireland needs to stay competitive, because other places are stepping up.”

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

READ MORE