R&D landscape for electronic engineering companies

Ireland is a major player in the European electronics space with over 20,000 people employed and host to 15 of the world’s largest 30 semiconductor companies.

Global semiconductor demand has surged in recent years with the emergence and increased focus on artificial intelligence (AI), data centres and electric vehicles (EVs).

With this increased demand comes a national semiconductor strategy which aims to create high-value jobs, secure long-term investment, and cement Ireland’s role as a critical player in Europe’s semiconductor future.

Sean Vincent, Scientific Consultant, Tax, and Stephen Brennan, Associate Director, Tax, at KPMG outline how with the correct investment and development, the electronic engineering sector has the opportunity to thrive and continue growing in Ireland.

KPMG’s report Silicon Isle showed that by 2040, Ireland could support up to 34,500 new semiconductor roles. Against a backdrop of accelerating global demand for advanced electronics and intensifying competition for research and development (R&D) investment, Ireland’s ability to sustain and expand its position in the semiconductor and electronics space will hinge on its capacity to attract, support and retain R&D activity.

AI-driven supply constraints and shortages

The global semiconductor industry saw an unprecedented component shortage during the Covid-19 pandemic (2020-2023) as a result of disrupted fabs and logistics, and a surge in demand for consumer electronics due to remote working.

However, as AI continues to boom, we see pressure being put on the supply of various components for AI usage, such as graphics processing units (GPUs) for data centres, high bandwidth memory for large language models (LLMs), and AI accelerators.

It’s not just GPUs that are in demand, with the AI industry shifting from building chatbots to autonomous AI agents, demand for Memory (RAM) and CPUs (Central Processing Units) surged through the second half of 2025 and has continued into 2026.

With this increased demand for new and improved electronic components, Ireland is in a unique position to capitalise on Europe’s chip production ambitions.

International competition

While Ireland has long been recognised for having one of the world’s best R&D tax regimes, they face stiff competition from countries around the globe. Singapore, for example, is known for having some of the most aggressive R&D incentives and poses a threat to Ireland for direct foreign investment in the electronics space.

While Singapore offers competitive R&D incentives, Ireland benefits by having an advantageous geographical location with links to Europe and North America, a highly skilled workforce, and a long- and well-established track record in the electronics industry.

In addition, Ireland’s physical scale, regional flexibility and benefits can provide structural advantages for larger electronic engineering investments.

Ireland is strongly positioned to accommodate facilities with significant infrastructure, power and expansion requirements, including pilot manufacturing lines, advanced packaging operations and semiconductor fabrication.

Ireland has demonstrated its ability to accommodate very large semiconductor manufacturing campuses, most notably Intel’s Fab 34 in Leixlip. This capacity for long-term scaling is increasingly relevant as companies seek investments amid growing demand driven by AI, data centres and EVs.

As well as this, the Department of Enterprise, Tourism and Employment recently announced Ireland’s National Competence Centre in Semiconductors (I-C3) which is designed to support startups and SMEs by opening access to essential resources such as funding pathways, specialist training, design tools and pilot line facilities.

The initiative aims to empower Ireland’s semiconductor startups and SMEs through practical access to design, production, funding and training, driving innovation and sectoral growth.