Intel is to seek 200 voluntary redundancies from its 5,100-strong Irish workforce as part of a "routine cost management".
Intel is one of Ireland's biggest multi-national employers with huge plants in Leixlip and Shannon.
The majority of the redundancies will be sought from the company's loss-making flash memory business. It is expected the jobs will go by the end of the year.
It is understood those taking the package will recieve six weeks wage per year worked in addition to statutory entitlements.
Intel posted a 44 per cent rise in quarterly profit in July but gross margins missed the company's target and shares fell nearly 5 per cent.
The world's largest chipmaker, Intel has seen its market share eroded in a bruising price war with rival Advanced Micro Devices (AMD). Intel has fought back with a slate of new chips and price cuts on older ones.
Margins have also been squeezed by lower prices for personal computer processors and weak demand for memory chips for mobile telephones. This has fuelled speculation that the multi-national may be planning to scale down its presence in Ireland in favour of more low-cost locations.
Last September chief executive Paul Otellini announced a global restructuring plan which seeks to make savings of $2 billion this year alone.
Minister for Enterprise, Trade and Employment Micheál Martin said the news was "disappointing" but insisted Ireland remained competitive.
"We have to keep things in perspective. We're looking at 200 redundancies in the context of about 5,000 positions," he said.
"Intel is a company of signature stature and a world leader in its field.There will always be swings and roundabouts, winners and losers. The fact that job creation is continuing to win gives us hope and confidence for the future."
The IDA said it was satisfied the redundancies were the result of internal staff restructuring at Intel and did not represent a threat to the viability of the firm. "The IDA doesn't see the job cuts as a concern in the long term context," said a spokeswoman.
Fine Gael enterprise spokesman Leo Varadkar described the news as a "grim indicator" of Ireland's declining competitiveness.
"Altogether, Ireland has lost more than 30,000 manufacturing jobs in the last five years," he said. ""During the recent era of easy credit, a booming construction sector and runaway property prices, the Fianna Fáil Government has forgotten what it takes for a small trade-dependent country like Ireland to be successful in a globalised economy."
Labour Party TD for Kildare North Emmet Stagg said the Government should remain in close contact with Intel so that any further issues that might arise can be identified and addressed before further redundancies result. "Intel has been, and will continue to be, a very significant employer in the area, and I sincerely hope that there will be no further job losses," he said.