search
Front > Comment > Shmulik Shelach

Intel returns to Ireland

Shmulik Shelach
22 Sep, 2011 22:20
שלח תגובה במיילShmulik Shelah

Fundamental shifts in the market are influencing the chip giant's decisions.

There is more to the geographical decision by Intel Corporation (Nasdaq: INTC) than Israeli government grants. An updated forecast by Gartner Group last week predicts that the semiconductor industry is heading for a slowdown. It estimates that the market will amount to $299 billion in 2011, compared with $300 billion in 2010, but it predicts only 4.6% growth for 2012, much less than the robust growth predicted six months ago.

The reason for the bleaker forecast is directly related to macroeconomic concerns and consumer spending. These are reflected in the sharp drop in Gartner Group's predictions for PC sales from 10.9% growth in 2011 to 3.8% growth in 2012. The mood swing did not miss Intel, the world's largest chipmaker. Earlier this month, the British and Irish media reported that Intel had halted the upgrade of its Fab 24 in Ireland to 22 nanometer technology.

It is worth paying attention to the Irish fabs. The last time that Intel invested in a new Irish fab was in 2004, when it built a campus at Leixlip, which was Intel's most advanced fab at the time, producing wafers with 65 nanometer technology. Intel built its next state-of-the-art fab - 45 nanometer technology - in Israel, and it is now upgrading its Kiryat Gat Fab 28 to 22 nanometer technology.

Citi Capital Markets believes that Intel's actions on its Irish fabs means that the company will carry out the next upgrade to 15 or 10 nanometer technology, scheduled in 2013, in Ireland. Intel plans to invest $5 billion in the procurement of equipment for state-of-the-art production lines for the new fabs.

Intel's moves in Ireland also teach a lesson. In 2005, the Irish government announced that it would stop subsidizing Intel's fabs, after handing over ₤100 million for the setting up of the last production line. Intel, for various reasons, and possibly because of the halt in support, decided to look elsewhere. Ireland was left with technologies that this year will become second class in terms of innovation, which is bad news for the Irish economy.

Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

Shmulik Shelach illustration: Gil Gibli Waze to go

Waze is a highly unusual exit for the Israeli tech industry, but it points to a new level of capabilities.

Shmulik Shelach illustration: Gil Gibli Did Waze really need the Chief Scientist?

Waze would have gotten along without government financing, but the company may be an interesting example of the real potential profits for the Israeli economy.

Shmulik Shelach illustration: Gil Gibli Facebook and Waze mull road ahead

Facebook has had limited success in creating revenue from smartphone users.

Shmulik Shelach illustration: Gil Gibli Mellanox confounds expectations again

Just as the growth was not completely clear, the explanations about the drop in performance are also inadequate.

Shmulik Shelach illustration: Gil Gibli NICE Systems and Verint Systems: 1+1=3

Such a deal could result in a company with annual revenue of $2 billion and improved profitability due to synergy.

Shmulik Shelach illustration: Gil Gibli Only one way for Waze

Given the risks and the opportunities, a quick sale looks like an almost certain outcome.

Shmulik Shelach illustration: Gil Gibli Palo Alto challenges Check Point

Palo Alto Networks' edge is not just in its approach, which targets more sophisticated contemporary challenges, but also in its hardware.

Shmulik Shelach illustration: Gil Gibli Mellanox muddles investors' minds

Mellanox says that it has a quarterly horizon for demand, and from this perspective, it emerges quite well from its guidance.

Shmulik Shelach illustration: Gil Gibli Mellanox bet well on high-speed

Eyal Waldman made a good bet that InfiniBand would be the preferred solution for high-speed computing communications.

Shmulik Shelach illustration: Gil Gibli "Check Point is over-conservative"

Merrill Lynch's Tal Liani sees network security company Check Point's problems as internal. Others see external threats. What's certain is that the market is changing.

Shmulik Shelach illustration: Gil Gibli Israel will rue failure to woo Intel

There is no way to explain the failure to create an extensive Israeli electronics industry except as the want of a suitable government policy.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018