Intel, the struggling American microchip producer, was awarded an additional €2.5 million from IDA Ireland this year, forming part of a substantial aid package tailored for businesses affected by heightened energy costs following Russia’s invasion of Ukraine. This brings the total amount granted to Intel by the IDA over the past year to €32.5 million, as reflected in a state aid database of the European Commission.
This funding was a fraction of a €100 million initiative launched by the Irish Government last year, approved by the European Commission in March 2023, to bolster companies engaged in the microelectronics manufacturing industry. Under this initiative, companies could request funds from Enterprise Ireland, Údarás na Gaeltachta, Local Enterprise Offices, and IDA Ireland. Although under this scheme, the cap for individual beneficiaries was €50 million. The initiative concluded in December 2023.
This is not the first instance of the Irish taxpayer financially supporting Intel. The corporation was awarded a substantial amount in the form of refundable tax credits from the Irish Government last year for expanding its large-scale manufacturing capacities in Leixlip.
As per Intel’s latest annual report, it acknowledged receiving a total of $645 million (€591 million) in grants and tax credits that can be refunded from overseas countries, with most relating to the enlargement of silicon wafer manufacturing facilities in Ireland.
Presently, the chip manufacturing giant is in the midst of reducing its global workforce by over 15,000 employees as part of cost-cutting measures, with the objective of saving $10 billion in 2025.
According to The Irish Times, employees based in Ireland await additional information concerning the anticipated retirement and voluntary redundancy scheme, potentially leading to an exodus of hundreds from the company. Notably, it may take several weeks to ascertain the total number of departures from the firm’s Irish operations.
Intel, the established giant, commands a substantial production establishment situated in Leixlip, Co Kildare and provides jobs to over 5,000 people in Ireland. Earlier this year, the company disclosed that it had offloaded a 49% stake in a joint enterprise linked to the Leixlip establishment to Apollo Global Management, an American private equity organisation, for a sum of $11 billion. This news arrived shortly after the completion of the construction of the Fab 34 facility, which had been undertaken at the expense of €17 billion.
In the meantime, the current week bore the revelation that the company is facing a lawsuit by shareholders asserting deceptive concealment of issues that resulted in subpar performance, job cuts, the suspension of dividends, and an over $32 billion reduction of market value in one day. The class-action lawsuit calls out Intel, CEO Patrick Gelsinger, and CFO David Zinsner, and was filed in the federal court of San Francisco.
Shareholders assert they were taken aback when, on August 1st, Intel disclosed their contract based chip manufacturing business was, according to their terms, “floundering”, thus costing billions more even as revenue waned. They argue that the Santa Clara-based company’s materially erroneous or misleading descriptions concerning the business and its manufacturing capabilities overinflated the stock price from January 25th to August 1st.
Intel did not provide an immediate response to the lawsuit which follows the company’s announcement, made last Thursday, that it would be suspending its dividend from the fourth quarter as part of its restructuring plans. Furthermore, the firm also reported a $1.61 billion net loss for the second quarter as revenue dipped by 1% to $12.83 billion. Additional reporting was provided by Reuters.