Nowadays, to get a seat on a global business stage that is increasingly dominated by artificial intelligence (AI) related investments, countries are rushing to find where they fit in the technology’s global supply chain. For Ireland, which already has an established domestic semiconductor sector, a new initiative is helping it sharpen its value proposition to investors.
Silicon Island: Ireland’s National Semiconductor Strategy, launched a few weeks ago by the Industrial Development Authority (IDA), hopes to promote Ireland as a semiconductor manufacturing and R&D centre for companies looking to establish themselves in Europe. John Durcan, the IDA’s chief technologist, tells Investment Monitor how input from the country’s experienced sector, academic researchers, and government know-how contributed to the initiative.
Go deeper with GlobalData
Industry knowledge from a decades old sector
The Irish semiconductor sector’s origins are in Limerick, where in 1976, Analog Devices established its first R&D centre and manufacturing facility.
“They started small, and now they employ over 2,000 people and are doing amazing work there with recent big investments,” Durcan says.
As global demand for semiconductors has risen in industries like auto, med tech, and life sciences, before exploding with the arrival of AI, Durcan says Ireland started asking what role they could occupy in the global chip supply chain.
“Where does Ireland have strengths? Realistically, we were never going to be the ones developing the foundation models at large scales, the US and China were probably going to be having that investment. But we said, okay, hardware and infrastructure, AI is going to need that […] So we looked strategically at where Ireland would add value to the future tech at a global level.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThere was also a desire to be “at the heart of Europe” and contribute to the goals set out in the EU Chips Act, which aims to increase Europe’s global market share of the semiconductor industry to 20% by 2030. Durcan says the IDA was adamant about “complementing what was there, rather than it appearing as though we were chasing everything.”
“What we found was that if we were looking at a growth trajectory for the sector, Ireland was the perfect location. An open economy, very open to engaging, very multicultural,” Durcan says. “We wanted to be a core part of it, and we took huge input from industry to help shape a lot of that.”
Inspiration from the CHIPS Act
While Ireland already had an established semiconductor industry, Durcan said they were inspired by industrial policies that strengthened public-private sector collaboration, such as the CHIPS and Science Act in the US and the EU Chips Act.
The supply chain vulnerabilities that the COVID-19 pandemic underlined also made the country a better candidate to be at the centre of Europe’s semiconductor sector. “We realised we actually had a lot of supply chain in Ireland […] There was a good base to build on, and we felt that we could accelerate maybe quicker than some other regions because we had a strong base, and we could leverage that to scale up.”
Throughout their planning of this initiative, the IDA also worked closely with the EU, participating in three of its pilot lines. These are “areas of new development with a particular focus on developing the next generation of research,” Durcan says. One of these programs is being undertaken with the Tyndall Institute in Cork and has a focus on photonics.
“That is a huge growth factor that people are looking at. It has a lot of potential in terms of using light and lasers, from energy efficiencies to faster data transfers,” he notes.
Their strategic pursuit of photonics, Durcan highlights, is a great example of Ireland looking at how they could apply their specific industry experience and expertise to a booming tech sector and contribute to the goals of the EU Chips Act.
“When we look at this, we’re realistic. We’re a small country. If we want to have impact, we need to be able to deliver but add value […] We engage with the [Commission] to understand what problems and areas are they looking at? We then go back and do an analysis internally within Ireland to identify the sectors where we could contribute,” Durcan outlines.
He says this approach not only delivers better value but also better credibility.
What’s the role of foreign investment?
One advantage that Durcan feels Ireland has been able to offer businesses in the past is acting as a gateway to what is widely considered a bureaucratic and complicated regulatory landscape in Europe.
“I suppose Ireland has had a track record of working with new companies in emerging areas as they use Ireland as a base to start off in Europe and then scale rapidly. We think of Google, they started off with 15 people in Ireland way back, and they accelerated that,” he says. “On the semiconductor side, those companies who are at the cutting edge want to do something in Europe. They’re looking to expand.”
“We will help them on that journey with Europe, and we will engage with them, helping them access funding […] For a lot of companies that might be coming from Asia, Africa or the US, who may not have a lot of engagement with the EU, there can be a lot of bureaucracy in a lot of the EU funding programs. So it’s helping them understand that.”
Durcan also highlights that specific sectors, such as med tech and automotive, are increasingly looking into designing chips for their specific industry needs. The Silicon Island initiative offers these companies a place with the entire supply chain necessary to do that, Durcan suggests.
“We’ve got facilities, we’ve got the R&D grants, we’ve got access to the tax credits, we’ve got the new strategy that’s committed to it, and we have access to European funding.”
In terms of who they are targeting, Durcan says the initiative is a general call out, but the IDA is also being purposeful about contacting major industry players.
“We always look at who is the best in class, and if they’re not in Ireland, we would reach out to engage them to look at Ireland as a base for expansion,” he suggests.
Addressing the skills gap
It is no secret that one of the biggest challenges facing the AI industry is developing a workforce with the right skills to power it. One aspect of the EU Chips Act addresses this issue through the creation of competence centres. These provide support to startups and SMEs so they can be integrated into the larger semiconductor sector.
“Ireland has committed to having one of those competence centres set up. But what we’ve done is tied it in with the research institute of Tyndall,” he notes. “What you will have there is a mix of industry with academia together in the one competence centre.”
Another available scheme is Ireland’s Skillnet program.
“This is a specific program of funding that’s available for industry where they can train up their staff, and we develop custom programs for different industry verticals. We currently have about 50 different verticals within the industry for their niche areas. But one of the most successful ones is called the MIDAS Skill Net Program (Microelectronics Industry Design Association). They look at the industry players and say, okay, what skills do you need over the next six, 12, 36 months?”
Given the rapid pace of change in the industry, Durcan also emphasises that the IDA want to have an agile approach, so that people’s skills aren’t outdated as soon as a new technology comes out. Having an open economy with free-flowing labour is an essential part of this.
“What we would see is a lot of knowledge transfer. People coming in for a number of years with their deep expertise, they will also train up people who are working here, people then will move back out into industry, and other people will come in. So there’ll be a flow of talent going in and out over that time.”
Decreasing costs
Given the resource intensity of the industry, companies have fled to locations with low energy costs, such as Southeast Asia or Texas. Durcan highlights that Ireland is looking at the different routes it can pursue to increase energy efficiency.
“We’re looking at bringing interconnectors into Europe to bring in more power. We’re also looking at offshore wind and growing that too in terms of renewable energies that will be coming in, and over time, what we will see is that those costs will come down.” Durcan also highlights that their access to EU funding, combined with Ireland’s grant support, tax credits and incentives, helps the ‘Silicon Island’ compete on cost.
It is important, he says, to ensure the sustainability of an industry that is evolving at breakneck speed.
“I think companies are getting that reassurance that you’re working with an Irish government, and Irish entities like IDA, who have a track record for looking and engaging with industry at scale. There’s a stability within that.”
