EU may probe €170m Intel cash injection
Competition Commissioner Neelie Kroes said the deal appears illegal and should be fully investigated by the commission.
Work is underway on the €1.6 billion plant in Leixlip, which will allow Intel to become the first company in the world to mass-produce cutting-edge 65 nanometer microprocessors for computers by 2006.
The company employs 3,200 people in its Leixlip plant, opened in 1989, and 92 in Shannon. Another 1,000 are employed as subcontractors.
The commission’s preliminary enquiry says it is difficult to justify State aid for Intel, even though the sum is relatively small compared to the American company’s planned overall investment of €3bn over the next 12 years.
State aid to private companies is intended to help create jobs in a poor region. It can also be justified if it involves research and development and a completely new product.
Part of the problem, according to the EU’s Competition Commission, is that Leixlip is not located in one of the union’s poor regions.
Ireland is one of the most prosperous members of the EU. The report also said Intel is the world’s largest microchip maker and has a dominant position in the global microchip market.
The grant does not encourage innovation, as it is for an existing product developed in the US, and it does not help the European economy overall, it said.
“The money is for a large scale production facility producing existing chips so, in itself, it would not make Europe more competitive as there is no R & D transfer to Europe and no new jobs created,” a commission official said.
Mrs Kroes will be pushing to open a full investigation into the proposed State aid at a meeting in Brussels tomorrow.
Commissioner for the Internal Market, former Finance Minister Charlie McCreevy, could ask for the issue to be postponed for a week.
There has been much behind-the-scenes lobbying in Brussels, including contacts from the Taoiseach to the President of the Commission, Jose Manuel Barroso, to prevent the investigation going further.
However, Mrs Kroes has publicly said she intends to reform and tighten up State aid rules.
She wants governments to direct help to smaller firms, involving some innovation and research.
Her reforms are due to be published in the next month or two.
