Ireland-EU dispute on Intel aid may benefit Arizona

International
Ireland-EU dispute on Intel aid may benefit Arizona
By Finfacts Team
Mar 5, 2005, 16:31

The Phoenix Business Journal has reported that chip manufacturer Intel is considering its Chandler semiconductor plant in Arizona for a $2 billion to $4 billion expansion that could result in 500 new high-tech jobs. It is also reported that Intel is considering other locations, such as Ireland and other countries around the world.

The newspaper says that Arizona could gain from the dispute between Ireland and the European Union concerning the provision of State aid towards the building of a new chip plant on Intel's existing site at Leixlip, Ireland.

The Phoenix Business Journal says that Arizona is generally at a large disadvantage compared to other US states and countries because the state traditionally doesn't offer big tax incentive packages to lure big business. A bill at the state Legislature that would change the way corporations are taxed could lead to more incentives for a potential Intel expansion here.

The so-called "sales factor" would benefit large manufacturers by allowing them to calculate their corporate income taxes based on in-state sales instead of the current, more expensive formula that also takes into account property and payrolls.

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The Intel Ireland campus, at Collinstown Industrial Park, Leixlip, County Kildare is Intel's fourth largest manufacturing site overall, and the largest outside the United States. Intel decided to locate its manufacturing facilities in Ireland in 1989, and production commenced on the 150 hectares former stud farm at Leixlip in 1990. Ireland is Intel's centre of manufacturing excellence in Europe. The existing Fab 10/Fab 14 factories, known as Ireland Fab Operations (IFO), are currently operating on 0.25 micron, 0.18 micron and 0.13 micron process technology for the manufacture of Pentium® III and Pentium® 4 support chips and Flash technology. Intel has invested some €4.5 billion in turning 360 acres of the Collinstown Industrial Park into the most technologically advanced industrial campus in Ireland. Employment on site is 4,700, with both direct employees and indirect long-term contractors.

The Irish Minister for Enterprise, Trade and Employment, Micheál Martin announced on Wednesday last that the Government has withdrawn from the European Commission the notification proposing an award of State aid to Intel Ireland in respect of Intel’s FAB 24-2 investment in its Irish operation at Leixlip, Co. Kildare.

This decision has been taken, in agreement with Intel and the IDA, in view of the pending Commission decision to open a formal inquiry into the notification, which could take up to 18 months to complete, and the clear indications from the Commission that the aid would not be approved at the end of that process.

It will not now be possible to grant the notified aid to Intel. However, the work on the project has already commenced at the Leixlip site, and it’s the Government's understanding that it will continue to plan.

The Minister said that he was disappointed with the outcome to the aid notification: “This is an excellent project which will create new jobs and will generate significant benefits for the local economy. As such, I would have thought it is precisely the type of project that EU Regional Aid provisions, which, of course, we are fully entitled to avail of, were intended to encourage. It seems inconceivable that an investment of this size by such a company would not involve substantial innovation, both process and product innovation, and a significant amount of this innovative activity will occur in Leixlip. Indeed, in all of my discussions on this case, I have emphasised the vital importance of attracting this type of investment in leading-edge technologies to the EU if we are to make progress in relation to the Lisbon Agenda, which President Barroso has so strongly supported since becoming President of the Commission.”

“It should be pointed out that Ireland was the only location in the EU considered by Intel for this investment. Had Ireland not succeeded in winning the project, it would have been lost to the EU. At present Intel employ over 5000 people at its Irish operation. Since 1989 Intel and the Irish Government have invested €5billion in the Leixlip operation. Intel is one of the most innovative companies in the world with a track record, stretching over several decades, of creating new products and markets and the Government and IDA will continue to work closely with them”, Minister Martin concluded.

On 19^th May 2004, An Tánaiste Ms. Mary Harney, had announced that the Intel Corporation had decided to invest a further €1.6 billion in its Irish operation in Leixlip, Co. Kildare. This investment was designed to equip the Leixlip facility with the technology to produce the next generation of microprocessors (65nm) and other products. When making this announcement, An Tánaiste specifically referred to the fact that the investment was supported by IDA Ireland, whose grant to Intel was subject to EU approval. Such approval is required under the European Commission’s Multisectoral Framework on Regional Aid for Large Investment Projects, which came into effect on 1 January 2004.