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Pay close attention to what Intel does next. It’s a test case for Ireland

Intel is selling a stake in its Irish plant - how much of the money is invested here will be an indication of whether Ireland’s appeal is waning

Intel has been a vital part of Ireland’s industrial base. Winning the project in 1989 was vital for IDA Ireland. As well as the huge Intel investment that was to follow (€30 billion and counting), it provided a showcase used to win many other investments. Where Intel went, others followed. What it does matters.

And now, needing to raise cash to invest in the chip plants of the future, Intel is planning to raise money by selling a stake in its Irish operations to an international venture capital fund. This is to release cash – reportedly €11 billion – to allow it to invest more in new technology and factories. But how much of this cash will stay in Ireland and be invested here?

Initial reports that the funds would be to build a new factory – or “Fab” – in Leixlip appear to have been incorrect. The company opened a big new plant – Fab 34 – there last year following a €17 billion investment. But Ireland lost out in late 2021 to an even bigger facility which is going to Magdeburg in Germany, with €10 billion support from the German government for a €30 billion investment. Intel did look at a site in Oranmore in Galway for this project, but said bids from other countries were more “aggressive”. Uncertainty over how long planning would take was one factor counting against Ireland. Big companies like Intel have also expressed concern about Ireland’s power and water supply. And then there was the hard cash on offer in Germany.

While it appears that a new Fab is not on the cards for Ireland, further investment to upgrade the existing plant is possible. But other locations will also be considered as Intel decides where to spend the money raised from selling a stake in Leixlip. How this plays out will be an interesting test case as to where Ireland now stands. Minister for Finance Michael McGrath has indicated that the IDA is discussing investment plans with the company and that there could be State cash in the table. Watch this space.


The backdrop is that the company plans to invest more in Europe – and the US – as it moves away from reliance on supply chains based in Asia. And it fully intends to squeeze as much cash as it can out of European governments – who are freer to support it via State aids under the EU Chips Act, introduced to try to increase the EU’s position in this vital area. And in turn the US is also increasing support for chip manufacturing under similar legislation, committing over $50 billion towards investment which could top $200 billion by the early 2030s. Intel is to receive $20 billion from the US Government to build new US plants in four states.

Ireland has benefited from the globalisation of US companies, but trends are now moving in the other direction

Rather than competing with other smaller countries, the traditional homes for much foreign direct investment, Ireland is now in the Champions League, facing the bigger countries, who are increasingly ready to spend big via grants, energy subsidies and so on to win investment. Big tech is now more than big business – it is geopolitics as big countries try to bring the development of vital technology within their own control, or at least to friendly states. Chips – particularly advanced technology used in sectors such as AI – are now seen as a vital national asset. Ireland is arguing that big countries should not be able to throw cash at attracting FDI – we won’t win in a subsidy race. But the Chips Act and talk of the need to make Europe stronger and more competitive from countries such as France are pushing in the other direction.

Ireland has benefited from the globalisation of US companies, but trends are now moving in the other direction. A Trump return would accelerate this, but it is happening anyway. Ireland needs to think carefully about its positioning in this changed world. Recent big projects, particularly in the pharma sector, give hope that the country remains competitive and attractive in some cases. Close political links and a long relationship with the US may allow Ireland to remain seen as a “friendly” option for American firms. But whoever is in the White House, the drive is also on to attract investment back to the US, particularly vital research and development.

And this happens as the Irish offering to foreign direct investment (FDI) is coming under pressure on a range of fronts. After a few strong years, Ireland is looking a bit complacent. Planning reforms are still awaited. Big projects vital to the future supply of water and power remain either stuck or progressing very slowly. The cost and availability of housing remains a big issue. The funding of third level and further education is inadequate. Ireland may have seen off the threat from OECD tax reform, but other battles at European level may lie ahead.

What happens with Intel will be an interesting test case. In need of cash, it did a similar deal in Arizona to help fund expansion there

There has long been talk that Ireland needs to reinvent its economic model. It has seemed out of place over recent years as investment literally rolled in to the State and corporate tax revenue soared. But the risk is that if Ireland takes its eye off the ball, the balance of new investment will slowly start to move away. This does not mean sudden closures or a rapid disappearance of corporate tax revenues. But it does mean Ireland slips down the list of places for new investment, with all the longer-term implications that entails.

What happens with Intel will be an interesting test case. In need of cash, it did a similar deal in Arizona to help fund expansion there. But the financing deal in Ireland and where the money will go still has to play out. There is good reason to expect the company to continue to be a big player in Ireland, given its substantial and successful operations here, where 6,500 people – and rising – are employed. But will Ireland still get its share of the new, cutting-edge investment from Intel and the other big players?

The State has done well from FDI. But these companies look to the long term and Ireland needs to be able to put a convincing case that it remains a good place for them to invest. The Irish “story” needs to be reinvented.