Intel to get NIS 1B grant from government
Grant aimed at doubling number of employees at Kiryat Gat facility, building new factory in northern Israel. Investment in both plants totals over $5 billion
In accordance with the Encouragement of Capital Investments law, the grant to Intel requires approval from the Ministry of Industry, Trade and Labor's Investment Center.
Said investment in the two plants totals over $5 billion. The grant is contingent upon Intel hiring another 1,500 workers for its Kiryat Gat facility and employing an additional 600-1,000 for its Northern plant.
Furthermore, under the Capital Investment Encouragement law Intel will be eligible for tax breaks and will become the first company to gain eligibility for a special favorable status under the Capital Investments law reform. The implication for Intel is a 5% cut in corporation taxes.
About a month and a half ago, Intel applied for a $960 million grant from the Ministry of Industry's Investments Center in order to finalize its investment scheme which included the technological expansion and upgrade of its Kiryat Gat factory.
Six months ago, the government approved a NIS 741 million grant for the expansion of Intel's Kiryat Gat factory. Over the past decade, the chipmaker has received over one billion shekels in grants from the Israeli government.
Approximately two months ago, Intel applied to the Ministry of Industry for a grant for an investment to double the size of its Kiryat Gat facility which would enable the plant to implement Intel's state of the art manufacturing technologies and beef up its employee ranks.
As mentioned previously, the company announced that additionally, it is considering the establishment of a new assembly plant in the north of Israel.
The Finance and the Industry ministers appointed an inter-ministerial committee, co-chaired by the Ministry of Industry Director General Sharon Kedmi and the deputy head of budget at the Ministry of Finance Eran Polak.
In collaboration with the State Revenues Administration and the Economics and Research department at the Ministry of Finance, the team for the past two months, has been examining the feasibility of various investment alternatives and their benefit to the economy as regards employment, advancement of technological innovativeness, increasing industry productivity per worker and strengthening periphery areas.
Additionally, the team examined for the first time the relationship between the value of the expected tax breaks for the factories and the grant awarded to Intel.
On the basis of the team's recommendation, the Ministers decided on a three-scale grant as follows: Up to NIS 300 million ($88 million) against an investment in the Kiryat Gat facility alone; an additional NIS 500 million ($145 million) against the establishment of an "anchor factory" in the north of Israel; and a further NIS 150 million ($45 million) for increasing the number of employees planned for the northern plant by 400 workers.
The required employment period is at least 10 years. Intel will receive the grant starting on 2014 as per its investment.
Steinitz remarked that "Intel's investment in its Israeli plants, as well as other recent investments in the country, reflects the company's faith in Israel's economic resilience."
The minister added that "the establishment of a new factory in the north of the country would constitute a strategic anchor for the area, expanding employment and contributing to the development of the periphery areas, in particular the northern periphery."
Minister Simhon added that "International Intel's investments in Israel are a vote of confidence in Israel's economy and human capital. Intel's grant request shows that the company prefers expanding its investment in Israel rather than in other places around the world. This move will improve employment and boost Israel's status as a cutting edge technology force."
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