TECHNOLOGY GIANT Intel has begun a $500 million (€375 million) refit of its Leixlip, Co Kildare, factory which will create 850 construction jobs, with an initial 200 technology workers being hired in advance of the new facility being completed.
The decision will offer a major boost for the Irish economy if, as expected, Intel goes ahead with locating a new production line in Co Kildare. Intel is investing an initial $500 million to upgrade the manufacturing facility but the ultimate cost could run into billions of euro.
The construction project, which involves a total refit of one of the older factories on the Kildare campus, is expected to take two years to complete.
In an interview with The Irish Times, Intel Ireland general manager Eamonn Sinnott, described the decision by the business's parent to invest in Ireland as a "watershed" for the local operations.
“What this decision represents is it sets us up for the next 20 years,” said Mr Sinnott. “I think it’s fair to say we’ve all been working hard on this for a long time.”
Intel Ireland management have been working for the last five years to secure new investment for the plant. The last major investment at the facility was the $2 billion put into building and fitting out a factory called Fab 24-2, which was announced in mid-2004.
Mr Sinnott said declines in energy and construction costs over the last three years had helped convince Intel to choose Ireland. But he said maintaining the 12.5 per cent corporation tax rate in the face of European pressure was key.
“If we had signalled we were willing to trade our corporate tax rate they would have factored that into their calculations and that would have a different result than the one that we have,” said Mr Sinnott.
Although no formal decision had been made to produce a new line of computer chips in Leixlip, the US corporation would not be investing such a significant sum of money if it did not expect a return on its investment, according to Mr Sinnott.
While it is unclear how many positions may ultimately be created as a result of the investment, the decision will secure current jobs at one of the State’s biggest private sector employers. Intel and its contractors employ about 4,000 in Co Kildare, while Intel employs another 300 staff at a research and development facility in Shannon, Co Clare. Worldwide the semiconductor company has 82,500 staff.
The factory which is being renovated, Fab 14, closed in the summer of 2009 with the loss of 300 jobs. At that point Intel management said the plant would be stripped down to make it ready for future investments.
On Thursday night Intel reported financial results for the fourth quarter which were the best in its 42-year history. Total sales for 2010 came in at $43.6 billion, an increase of $8.5 billion, or 24 per cent, on its 2009 performance. “2010 was the best year in Intel’s history. We believe that 2011 will be even better,” said Paul Otellini, chief executive of Intel.
To meet demand, the company said it would invest $9 billion on factories and other capital spending this year. In 2010 it spent $5.2 billion. Each giant factory costs about $2.5 billion to build, although the costs in Ireland will be lower as a building is already in place.
Intel also said it will have four factories producing its latest generation of technologies at a time rather than its current model of having three factories working in parallel.
Although 70 per cent of Intel’s manufacturing capacity is in the US, the Irish plant is increasingly competing against factories in Israel and China to win investment. “This demonstrates that we can compete,” said Mr Sinnott.
Israel has been working hard to get the firm to expand its operations there. Last October Israel’s finance ministry offered grants of about €135 million if Intel upgraded its factories in the country.