Intel remains the bellwether of the Irish technology sector. It may no longer be accurate to say that when Intel sneezes Ireland catches a cold, but our fortunes remain entwined.
The chip maker’s latest setback is perhaps not as bad as it seemed at first blush. Its shares took a dive last week when it told the market it would not be able to keep up with demand for its processors. Rather than a victim of its own success, it was more a victim of its own cutbacks.
Having mothballed or sold off the machines making older model processors, it was caught off guard by a surge in demand for these chips as a result of data centres being upgraded to service the demands of the AI boom.
Much – if not everything – now hinges on demand for its next generation of chips. On the bright side, it has a deep-pocketed shareholder in the form of the US government, which converted $10 billion of loans into equity. It is also backed by Softbank and Nvidia.
What this means for the 5,000 or so people employed at its chip factories in Leixlip is equally unclear. But it’s hard to escape the uneasy feeling that Intel’s best days in Ireland may be behind it as a result of missing the boat in AI.
The focus on Intel’s problems has hidden deeper problems related to the growth of AI for Ireland’s tech sector. The Wall Street Journal wrote last weekend about how the US stock market has fallen out of love with software companies. It homed in on three companies – Salesforce, Adobe and ServiceNow – which all have significant operations here and have all seen their share prices fall by 30 per cent since the start of 2025
What concerns investors is the extent to which these companies’ business models will be affected by AI. One area in which AI does seem to excel is in writing code, so why pay Salesforce for a software tool when you can get Claude or ChatGPT to build one for you?
The same argument could be made about a number of other software companies with significant operations here such as Workday and SAP who have seen their shares fall by 27 per cent and 23 per cent in the last 12 months.
These five companies between them employ over 11,000 people in Ireland.
We are at something of a hinge point, with markets simultaneously worrying about both the impact of AI on traditional software companies and the possibility that the AI boom may be a bubble.
The latest person to sound a note of caution in this regard was the Microsoft chief executive Satya Nadella. Speaking at the World Economic Forum in Davos last week, he cautioned that unless AI adoption spreads beyond large technology companies and rich economies, it would run into trouble.
The danger for Ireland is complacency. It is true that large software businesses here are exposed to the downside of AI. But it is also true that the tech giants going hell for leather to achieve dominance in AI are also heavily invested here, notably Alphabet and Microsoft which employ over 10,000 between them plus thousands more contract and temporary staff.
Open AI and Anthropic – the companies behind Chat GPT and Claude – also have their headquarters for Europe, the Middle East and Africa (EMEA) here. The situation with X and its AI engine Grok is more complex, but it has its EMEA head office here. Total employment across all three is in the low-digit hundreds.
IDA Ireland’s annual review for 2025 highlighted only one AI related project: PayPal opened an AI research centre in Dublin, creating 100 jobs. It also namechecked AI in the context of the €2.5 billion committed to research and development by its clients.
If jobs are any guide, then very little of the billions being pumped into AI is coming Ireland’s way. It is also worth bearing in mind that in the “America First” world of the Trump administration, companies are not going to be seeking a lot of publicity for significant investments made outside the US.
Perhaps this low level of investment doesn’t matter as long as the AI behemoths – one of which will eventually achieve dominance – have their EMEA headquarters here and funnel their non-US profits through Ireland and we take our sliver of corporation tax.
At the same time, it is hard to avoid the niggling feeling that IDA Ireland needs to land a flagship project in this area to keep us on the map when it comes to foreign direct investment.
Attracting a new Intel is easier said than done. The Large Energy-User Action Plan (LEAP), published earlier this month, has as its first objective the attraction of “the next generation of investment in energy intensive sectors, such as life sciences, semiconductors, AI and data centres”.
It might be a case of “sticking to the knitting” and the gravitational pull of data centres might not be what it was, but it is a start.