Photo: Amir Cohen
Intel facility in Kiryat Gat
Photo: Amir Cohen

Intel's choice: R&D center or assembly plant

Government relaxes prerequisites for global chip giant's NIS 1 billion grant. Intel still holding off decision whether to accept grant's terms in return for NIS 5 billion investment on its part

Global chip giant Intel is holding off the decision whether to accept the terms set by the Ministry of Finance and Ministry of Industry, Trade and Labor for an NIS 1 billion (about $264 million) grant.


The grant is contingent on the company investing NIS 5 billion ($1.3 billion) in doubling the size of its Kiryat Gat plant, hiring an additional 1,500 workers, and establishing an assembly plant in northern Israel which will employ 600 to 1,000 workers.


Calcalist has learned that the government relaxed the grant's terms and offered Intel the choice of either establishing a research and development center which will employ several hundred workers or opening a new assembly plant in northern Israel.


Three weeks ago, Calcalist revealed that Intel decided to put off its decision until the second quarter of 2012 on the backdrop of the global economic situation and due to the fact that the company posted a profit warning for the previous quarter.


This is the second time Intel postpones its decision. In September 2011, the company announced that it was putting off the decision until January.


Last July, Finance Minister Yuval Steinitz and Minister of Industry, Trade and Labor Shalom Simhon approved a NIS 1 billion grant in return for Intel investing in two factories in Israel.


If Intel accepts the government's terms, it will receive the grant starting 2014 concurrent with the implementation of the development scheme outlined by the government.


Intel will become the first company eligible for a preferred enterprise status under the Law for the Encouragement of Capital Investments. The implication of such a status is that Intel will pay a reduced corporate tax rate of 5%. Over the past decade, Intel has received over $1 billion in grants from the government.


The Ministry of Industry, Trade and Labor responded that through the Investment Center, it is endeavoring to create jobs in periphery areas with the aim of increasing participation rates in the labor market, reducing socio-economic inequality and boosting economic growth.


For this end, says the ministry, the Investment Center is willing to assist Intel in funding a plant in Kiryat Gat under the condition that it establish either an assembly plant or an R&D center in a periphery area, in which it would hire 1,000 production workers or hundreds of software engineers.


The Ministry of Finance was unavailable for response. Intel decline comment.


Click here to read this report in Hebrew



פרסום ראשון: 01.24.12, 13:34
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