The Government says it believes Intel will go ahead with a €1.6bn investment project at Leixlip, Co Kildare even though it has withdrawn its request for grant aid.
The Government dropped its attempt to get grant aid sanctioned by the European Commission for the computer company.
In a statement the Minister for Enterprise, Trade & Employment, Micheál Martin, said the decision had been taken in agreement with Intel and the IDA.
He said it would not now be possible to grant the notified aid to Intel.
Mr Martin said the decision had been taken in view of the pending EC decision to open a formal inquiry into the notification, which could take up to 18 months to complete.
He said he had indications from the commission that the aid would not be approved at the end of that process.
However, Mr Martin said that work had already commenced at the Leixlip site in Co Kildare, and that it was his understanding at this time that the firm would continue with the investment.
Mr Martin said he was disappointed with the outcome.
'This is an excellent project which will create new jobs and will generate significant benefits for the local economy,' Mr Martin said.
'As such, I would have thought it is precisely the type of project that EU Regional Aid provisions, which, of course, we are fully entitled to avail of, were intended to encourage,' the Minister continued.
He said that Ireland was the only location in the EU considered by Intel for this investment.
'Had Ireland not succeeding in winning the project, it would have been lost to the EU,' he added.
Intel at present employs over 5,000 people in its Irish operations.
Since 1989 the company and the Government have invested €5 billion in the Leixlip operation.
