Two events take place this Tuesday that could have major implications for the economy.

First is the budget, arguably the most important exercise in financial management by an Irish government in decades. On the same day Intel, now Ireland's largest private-sector employer, reveals its third-quarter results.

The economic fortunes of Ireland are now inextricably linked to those of this US chip maker, whether we like it or not. Employing over 5,000 people at two main sites, Intel's exit from this country would have such wide-ranging implications for Ireland's GDP that it would make the departure of Dell look like a minor economic setback.

The ESRI admitted last week that an Intel departure would prompt the think-tank to revisit its entire economic forecasts for the next few years, although it admitted it would take Intel years to wind down its operations in Ireland because of their sheer size.

Tech stocks such as Intel staged something of a rally in the second half of last week, but the company's share price is down almost 40% year-to-date. Still the company stands on an inviting P/E, especially for a tech company.

Broker Piper Jaffray recently upgraded the stock to 'buy' from 'neutral'. The analysts said Intel shares were trading near "trough valuations" at 13 times their estimate for 2009 earnings.

"Intel's competitive positioning is the best it has been in the history of the company," they wrote.

The Irish operation employs about 5,000 people directly and indirectly. It also hosts Intel Communications Europe, the R&D arm of its European operations, the kind of high-end facility the government wants to see more of.

Intel is in a strong position in that its chief rival for so long, AMD, is struggling. Intel spends more on plants and research than AMD makes in annual revenue.

Instead of cutting back like Dell or HP, Intel is ramping up spending and will invest $11.2bn this year on plants, equipment, research and design.

Reasons to be fearful

? The downturn in the world economy must eventually hit orders of PCs and ultimately chips and microprocessors.

? Most major technology companies are increasingly outsourcing their manufacturing operations to
reduce costs.

? Intel's Irish plant recently missed out on an
expected investment for work on
a new product line.

? The wider downturn in the world
economy has to eventually hit orders of
PCs and ultimately chips and microprocessors

? Most major technology companies are increasingly outsourcing their manufacturing operations to reduce costs.