Intel Corp. says it will build a new chip factory in Kiryat Gat at a cost of USD 4 billion that would employ 2,000, with the Israeli government kicking in USD 525 million.
Prime Minister Ariel Sharon announced the investment at the weekly cabinet meeting.
“I see this decision as a declaration of confidence in Israel’s economic policies, in its stability and strength," Sharon said.
But Intel said Sunday it had not finalized its decision, Associated Press reported.
Intel spokesman in Israel, Koby Bahar, said the company has not made a decision to build a new plant in Israel, the AP said. U.S.-based Intel spokesman Chuck Mulloy declined to comment Sunday, CBS Marketwatch reported.
Sharon said Intel chief executive Craig Barrett told him over the phone Saturday night that his company had chosen Kiryat Gat, where Intel already has a major factory.
The factory, according to Sharon, would employ 2,000 people directly, and an additional 2,000 indirectly. The company already employs several thousand at its existing plant in Kiryat Gat, a growing city south of metropolitan Tel Aviv.
Intel had asked Israel to set its investment at 20 percent of the project from the original offer of 12.5 percent, but settled at a middle figure, officials said.
Five years
Ynet has learned that Intel has agreed to build the factory within five years of receiving permission. A summary of the deal was sent out by the Investment Board this week to Intel, the Treasury and the prime minister's office. Later this week Intel is to submit a formal request for the factory to Israel’s Investment Board.
Intel Corp.’s second factory in Israel would manufacture silicon chips for microelectronic components. Intel has also agreed as part of the deal to upgrade its existing factory in Kiryat Gat without an additional grant of NIS 600 million (USD 130 million) it had requested. Rather, it will receive tax breaks instead.
Ongoing negotiations ran into trouble recently when Intel informed Finance Minister Benjamin Netanyahu that it wanted the higher grant to build the factory. Netanyahu refused the higher grant point blank.