IDA Ireland has an enviable track record when it comes to attracting big technology firms. And they don't come much bigger than Intel, arguably the agency's most important catch.
The semiconductor firm’s decision to establish its European manufacturing operations in Leixlip in 1989 proved to be highly significant. It served as a reference point for the IDA as it sought to entice other companies here, and helped to encourage the development of a burgeoning tech industry.
But with news that Intel is to cut 12,000 jobs worldwide at it seeks to move away from its traditional business of selling chips used in personal computers, there are concerns that Ireland may bear the brunt of the cuts.
Intel has invested $12.5 billion (€11bn) in its Irish operations over the past 27 years. It currently employs more than 4,500 at its flagship plant in Co Kildare and an additional 700 at facilities in Shannon, Belfast and Cork.
Just two years ago it reaffirmed its commitment to Ireland when it announced a $5 billion upgrade at the Leixlip campus in what was the single largest private sector investment in the State’s history
Many onlookers see this investment and the Irish unit’s shift away from pure manufacturing to cutting-edge research and development as evidence that Intel is here for the long term.
“Intel has a very big footprint here and it makes sense for them to keep building in an environment in which they are comfortable.
"They have established very strong relationships in Ireland over the years, and the work their employees are doing now is considerably more advanced than it was when the company first set up operations locally," said Ian Talbot, chief executive of business organisation Chambers Ireland.
His views are echoed by Catherine Murphy, the Social Democrat TD for Kildare North.
“People will obviously be concerned until we know exactly how and whether Ireland is going to be impacted by job cuts, but there is also an awareness that Intel made a huge investment here relatively recently and that hopefully provides some degree of certainty about the future of the company in Ireland.”
Nonetheless, the chip giant’s move away from personal computing, with which it is synonymous, and into newer technologies such as the Internet of Things (IoT) will not be easy. And there are many who believe that what is bad for Intel will likely be bad for Ireland.
"As a presence in Ireland, Intel is key. It's an absolute stamp of approval of the quality of engineering here and of doing business in the country. Anything that affects the company affects us," said Ciaran Connell, chief executive of DeccaWave, a Dublin-based developer of next generation IoT-focused semiconductors.
While not the first semiconductor firm to set up in Ireland (Analog Devices beat them to it when it opened in Limerick in 1976), the arrival of Intel here helped put the State on the map.
“Intel wasn’t the start of the technology sector here, but its continued presence and that of its rivals encouraged a wave of students to study engineering at college and that led to a stream of talent that companies are still benefitting from now,” said Connell.
Former Intel Ireland chief Jim O'Hara is now chairman of Deccawave, and Connell said the start-up is quick to mention this and Intel's presence in Ireland when pitching the firm. They are not the only ones.
The IDA and the American Chamber of Commerce in Ireland have long cited Intel’s association with the State when trying to woo other foreign direct investment clients.
Both organisations’ refusal to comment publicly on Intel’s recent announcement is seen in some quarters as evidence of their deep concern over the company’s future here and their fear about rocking the boat by voicing them.
The company has said it will inform employees affected by the cuts over the next 60 days.
Gina Quin, chief executive of Dublin Chamber of Commerce, says, regardless of what actually happens next, Intel's announcement serves as a warning.
“These global job losses are a reminder of the need for Ireland to remain competitive to ensure we attract and retain investment and talent,” she said.
Quin added that even it there are redundancies close to home, Ireland’s tech sector is now so firmly established that it can weather the storm.
“Intel’s presence here has undoubtedly helped attract other multinationals to also base themselves in Ireland. Today 10 of the top 10 ICT companies in the world have a presence in Ireland.
“The fact that multinationals are here in such large numbers is a validation of Ireland Inc. Having such a buoyant and extensive cluster of companies here ultimately provides a level of security for workers in the ICT sector.”
PC sales
That Intel is shifting focus comes as no surprise to anyone with even a passing interest in technology. PC sales have been falling dramatically in recent years, with research firm Gartner announcing earlier this week that global shipments fell 9.6 per cent to 64.8 million units in the first quarter of this year, its lowest in almost a decade.
Announcing its latest results on Tuesday, Intel said its IoT and data-centre business now accounted for around 40 per cent of its revenue and the majority of operating profit last year, These are now seen as the company’s primary growth engines, but will shifting focus to produce chips in this space prove successful?
“Everybody knows about Intel’s muscle and capability and, if it’s serious about a particular market, it is going to do extremely well in it. That the company has said it is to move away from PCs is more a validation of the importance of IoT and the mobile space than anything else, said Connell.
“The fact that Intel in Ireland has been doing a lot of work in the IoT area bodes well.”
Tim Jennings, chief research officer at industry analyst Ovum, suggests that Intel finds itself in a similar situation to that of Microsoft. Once the world's wealthiest corporation, Microsoft has struggled to stay relevant in a world in which the PC is no longer king.
“The difficulty for Intel is that when you’re such a big manufacturer it is difficult to be nimble in what is a very fast-moving competitive industry. They missed the transition to mobile because they expected there to be a slow evolution from the PC world, and they tried to set the agenda by defining a new category with ultrabooks but that didn’t work for them and it’s hard to see them catching up in that space now,” Jennings added.
Nonetheless, he does believe the company can make waves in the IoT space.
“Intel are in a good place with IoT but the market is much more diverse than what they are used to. There are a whole range of different applications and form factors to contend with, and it will be difficult for any one company to establish a dominant position, as Intel did with the PC.
“It is critical for them to do well in IoT and and I think, given their muscle, that they can do it...What I’d expect to see them do is pour more money into R&D and to make some technology-led acquisitions over the next year or so to help position them for the future,” said Jennings.
Back in Co Kildare, Murphy is hopeful that Intel will continue to have a major presence in the area in the future.
“Intel has been an influence on other multinational firms such as HP coming to Leixlip, and there have been numerous indigenous companies that have sprung up over the years because of it.
“Any downsizing of the plant or job losses would be a major loss, and we all hope that such a situation will not happen.”
