Intel's multi-billion decision to put Ireland under test amid US plans to overhaul global tax 

Chipmaker may opt to double up on its enormous presence in Ireland — or invest elsewhere in the EU

In March, Intel announced it was creating 1,600 new jobs in a new microchip manufacturing facility on its campus in Leixlip, Co Kildare. The chip giant is on track to decide in the next six months whether it will expand in Ireland, or make its first investment elsewhere in the EU.

Intel remains on track to make a key decision in the next six months over the location of its next multi-billion investment in the EU, setting a test for Ireland just as US president Joe Biden pushes for an overhaul of the global tax regime.

The Irish Examiner understands that Intel is sticking to a plan to decide by the end of the year on whether to double up on its enormous investment in Ireland, home to the chipmaker's only existing EU semiconductor plant, or whether to go for the first time elsewhere in Europe.

The decision will undoubtedly weigh the renewed push behind overhauling global tax after Mr Biden gave his support to large European powers such as France, to set a minimum global tax corporate tax.

Ireland's tax rate put to the test

By pushing for a 21% rate of tax on the global earnings of large US corporates, Mr Biden is effectively proposing the setting of a minimum global rate of tax. Such a move is widely seen as a major threat to  Ireland's 12.5% tax regime in luring future US investments in competition against the higher tax rates of continental Europe.

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Intel's decision in the coming months over where in Europe to place its next huge investment will put Ireland's corporate tax offer to the test, at a time of major upheaval, senior economist Jim Power said.

Intel employs around 5,000 people, mainly at Leixlip in Co Kildare, but its influence extends well beyond that employment and it is likely to be among the handful of US multinationals that account for the bulk of the corporate tax revenues collected by the exchequer. 

Booming corporate tax take 

Last year, during the worst of the Covid pandemic, the State collected €11.8bn in corporate tax revenues and the single tax source now accounts for a record 20% of all tax revenues. 

Any new investment by Intel will be of huge significance to Ireland because the chipmaker was among the original hi-tech investors in the State at the start of the Celtic Tiger era in the early 1990s, which drew a line over the debt crisis of the 1980s. 

With the new European investment, Intel for the first time will be making chips for others, in a sort of contract manufacturing process under what in the industry is known as "foundry production". 

Intel manufactures the majority of its technology in the US at three sites, in Oregon, Arizona, and New Mexico. 

CEO's tour of European capitals

It announced last week future investment in New Mexico. Ireland and Israel are the two key non-US locations.

Intel chief executive Pat Gelsinger visited continental European capitals in recent weeks. 

Intel is looking for €8bn in public subsidies towards building a new semiconductor plant somewhere in Europe, Mr Gelsinger was quoted as saying.  

"What we're asking from both the US and the European governments is to make it competitive for us to do it here compared to in Asia," Mr Gelsinger told Politico in an interview.

Reuters reported that the company later distanced itself from the report, saying he had not given a specific figure, although he had made it clear that EU leaders needed to invest to ensure a vibrant semiconductor industry.