Why Should Government And The Industry Help Intel?

It seems a bit rich for a company proposing to spend $12.5 billion on capex this year to be asking other companies, and government institutions, for help in developing a technology which will, mostly, benefit that one company.

The company which, more than anyone else, has pushed for 450mm, is Intel, and Intel recently announced a 2012 capex budget of $12.5 billion.

That’s about half the estimated cost of the 450mm transition.

The EU is thinking of backing 450mm development, and Future Horizons has done a report for the EU on whether this is a worthwhile thing to do.

But if Intel will be the main beneficiary of 450mm, and some would say Intel – with revenues of $50 billion in a $300 billion industry – is too big and too powerful already, is it not in the best interests of the rest of the semiconductor industry to oppose 450mm development and refuse to have anything to do with it?

Last week I put this question to the CEO of Future Horizons, Malcolm Penn.

“Yes, possibly,” was Penn’s reply.

The argument in favour of backing 450mm with taxpayers’ money is that it will keep the European tool-makers competitive.

You have to balance that argument against Intel’s overweening position as the Colossus of the semiconductor industry.

Especially when Intel has been found guilty of anti-competitive conduct leading to higher consumer prices by competition authorities in Korea, the EU, the USA and Japan.

So should the consumer/taxpayer subsidise a project which will help a large company screw them?



  1. That’s interesting, Stooriefit, it’s exactly the same mentality as the bankers, PE guys etc I.e take as much as you can from society and give back as little as you can. It’s a horrible attitude.

  2. The large multinationals just the piss out of Irish administration…
    An example: temporary workers have to be made permanent if they work in the same company for a reasonable length of time, so that they get nice things like statutory sick pay, paid holiday and due process before being laid off.
    All this is far too inflexible and just not anglo-saxon enough for the likes of HP and Intel (for example, I’m not pointing the finger at them in particular). They joined a club which cunningly rotates workers doing similar jobs around the various companies. No one ever gets enough length of service to trouble the employment lawyers.
    It is legal, but that is about all you can say for it.

  3. Are you Mitt Romney (anonymous)? You sound as if you could be

  4. Not a case of avoiding them, just paying about 10-15% and governments not wasting that money on unnecessary things.

  5. That’s as maybe, Mike, but if we all avoid paying taxes we all end up like Greece

  6. Uh .. it’s not the Irish tax rate that is too low, it’s the rest of Europe that is too high !!

  7. I don’t think it’s emotion, Mike, we’ve all seen these giant US companies like intel, Google and Facebook funnel their European profits through Ireland where the tax rate is very low while they get full access to the European market. all perfectly legal but slightly shabby. Well it hasn’t done the Irish much good. how many spIn-offs have come out of Intel Ireland? How many other companies have followed Intel and put fabs in Ireland? How much Intel technology has been transferred to Irish companies? How much subsidy, cheap loans and other inducements has Ireland given Intel? It’s an interesting equation but I doubt the IDA have weighed up all these considerations before reaching their judgment.

  8. I think you are letting emotion wash over the facts here David. I’ll e-mail you the name of the person to talk to at the IDA who is very informative on the contribution of Intel to Ireland

  9. Which indeed Lefty? Ireland has done more for Intel than Intel ever did for Ireland – just look at their respective balance sheets!

  10. It is a way for EU to stimulate it’s economy – by Intel acting as a social-benefits queen.
    Maybe Intel will threaten to go to China instead?
    Which economy wants to be seeded with Intel bleeding-edge tech the most?

  11. That’s assuming Intel can do it without the help of the tool-makers, Mike, if the tool-makers are involved then the technology gets disseminated. P.S. And Intel benefited when Motorola, IBM and Infineon led wafer size transitions. It would be evil of Intel to try and keep this one to themselves.

  12. The issue of how much a fab benefits a country was one of the specific questions posed to the 450mm report team by the EC and it was researched thoroughly.
    Hopefully when the report is released publically you will find it interesting reading but obviously until it is released I cannot comment further on its contents.
    Regarding Intel, one could argue that without the fines paid to the EU, public services would have been cut back even further. And if they did pay for 450mm themselves they would keep it to themselves. That would create a true monopoly situation in almost every sector of semis other than analogue, power and MEMS. Do you want that ?

  13. I absolutely agree, Mike, that Imec and ASML should get taxpayers’ support.
    I don’t see why Leixlip should get taxpayers’ support – the experience of all those foreign Scottish DRAM fabs shows that the local community benefits very little from having these fabs.
    For consumers to be asked to support 450mm which will mostly benefit Intel, when Intel, already representing one sixth of the semi industry’s revenues, is too big and powerful for the good of the overall semi industry, is wrong-headed – especially when Intel has been convicted in Asia, Europe and America of keeping prices for consumers high by anti-competitive behaviour, and especially when consumers are being squeezed to the point of rioting in the streets by government cut-back to important public services. No, if Intel wants 450mm, it should pay for it itself. It could pay for the entire 300mm – 450mm transition out of half a year’s revenues.

  14. Would you rather Europe didn’t support key companies like ASML and IMEC or locations like Leixlip and Intel go elsewhere ? It will make its products with or without them.

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