Feeds

Ireland withdraws grants for €1.6bn Intel fab

Wafer plant still go, says company

  • alert
  • submit to reddit

The Power of One Infographic

In a surprise announcement on Wednesday, the Irish government said that it would withdraw its proposed funding for a €1.6bn Intel plant in Leixlip, Co. Kildare that is set to create some 400 additional jobs. The decision follows apparent concerns from Brussels indicating that the backing may not be allowed under EU rules.

Intel said it will still go ahead with the wafer fabrication factory, called Fab 24-2, but added that it may now be forced to reassess any future investments in Ireland. Already the company has some 4,700 direct and indirect employees on the Leixlip campus, as well as a further 110 people employed at Intel Communications Europe, located in Shannon. It is understood that prior to the decision to build the new Leixlip facility, Intel considered setting up plants in Israel, China and the US.

Early reports of a possible hold-up on the investment surfaced last weekend, but it was Wednesday before government development agency the IDA confirmed that the EU looked set to quash the Dublin government's backing for Intel's Fab 24-2, believed to be worth around €100m. "This decision was taken after consultations with Intel and follows a process, which over the past six months included extensive discussions with EU Competition Directorate at official and government level, regarding the project and its compliance with EU regional investment aid regulations," the IDA said in a statement.

"In the course of these discussions it became clear that the EU Commission was not disposed to approving the use of state aids by Ireland in support of the Intel investment," the agency added. In fact, the EU is understood to have been concerned about whether the proposed factory would create any jobs, much less the 400 jobs that were announced in May 2004, when the plan was announced.

Along with Intel's own reservations about working in Ireland, a great deal of concern is also now emerging over whether Ireland will have the power to attract large multinational corporations with generous aid packages - a key ingredient in the country's economic growth in the last decade. A source within the EU, speaking to the Irish Times, pointed out that the government's decision has apparently been premature, noting that Competition Authorities had not begun their investigation in earnest. "It doesn't suggest that the Irish government was very confident in its case," the unnamed European Commission source told the newspaper.

But more worrying, from an IDA perspective, are new rules in Europe which are expected to have a profound impact on the agency's ability to win enormous investments from multinational giants such as Intel. The new multisectoral framework on regional aid for large investment projects, which came into force in the European Union last year, says that investments worth more than €50m must now get a stamp of approval from Brussels. Investments that dominate within their sector - such as Intel - will not receive approval, unless the project concerned delivers an innovative new product.

Notably, projects that consist mainly of research and development - such as the recently approved Bell Labs R&D centre which was announced last year - are also likely to get the okay from the Commission.

Intel's Leixlip wafer fabrication plant apparently did not meet either criterion, despite IDA claims to the contrary. "As the Commission could not be persuaded from what we believe is a very narrow and unhelpful interpretation of the matter... the notification was withdrawn," the IDA said.

While the agency insisted that the move will not impact on Ireland's ability to attract new investment, it was very clear about its feeling towards the EU's interpretation of the rules, and the long-term consequences of its "narrow" view. "The competition for this investment was global, as will be the competition for future investments," the IDA said. "Europe cannot afford to lose access to the world's most advanced semiconductor technology."

© ENN

Related stories

Intel ups Indian investment
Chip biz breaks quarterly fab spend record
Intel adds $375m to Asia-Pacific investment tally

Boost IT visibility and business value

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.