Intel confirms massive Israel investment plan, which ministers say is worth $11b

Finance minister says Kiryat Gat expansion expected to bring thousands of jobs to the south; tech giant said to ask state to shell out amount equal to 10% of its investment

Intel's plant in Kiryat Gat (Courtesy)
Intel's plant in Kiryat Gat (Courtesy)

Intel said Tuesday it was expanding its operations in Israel, where government ministers said the US computer chipmaker will invest nearly $11 billion in a new plant.

“Intel today announced it will submit a business plan to the government of Israel for continued investment in the company’s Kiryat Gat manufacturing site,” a statement from Intel’s Israeli representatives said.

Daniel Benatar, the general manager of the company’s manufacturing plant in Kiryat Gat, said the plan shows the tech firm “continues to demonstrate the strong performance of Intel Israel and we continue to lead in terms of corporate economic and social investment in Israel.”

The tech giant said it would not comment on schedules, costs and technologies of the project.

Finance Minister Moshe Kahlon said late Monday he was informed by Intel of its decision “to invest another 40 billion shekels (almost $11 billion), an unprecedented decision expected to bring thousands of jobs to the south.”

Moshe Kahlon leads a faction meeting in the Israeli parliament, on December 24, 2018. (Yonatan Sindel/Flash90)

Economy Minister Eli Cohen said Intel had chosen to “build its most advanced plant here in Israel.”

A Globes report earlier Monday said the deal was contingent on the US tech mammoth receiving hefty help from the state with a grant worth 10 percent of the investment.

In May, Intel confirmed plans to invest $5 billion (NIS 19 billion) in expanding its Kiryat Gat production plant in Israel, where it produces and develops some of its most advanced computer chips, through 2020. As part of the investment plan, Intel is expected to get a NIS 700 million government grant.

The company already pays a reduced 5% tax rate, which it would not seek to change under the arrangement, according to the report.

The US firm is transitioning from being a maker of silicon computer chips to a data-centric company, with activities ranging from the manufacturing of chips to developing safety features in vehicles, wireless phone connections, drones and cloud-based technologies.

An $11 billion infusion by Intel would be one of the largest ever into the Israeli economy, topped only by Intel’s $15 billion purchase of car software maker Mobileye in 2017.

Since setting up operations in Israel in 1974, the US firm has made cumulative investments and acquisitions of some $35 billion in Israel, as of May 2018, and has grown into the largest private sector employer in the high-tech industry.

Workers at Intel’s Kiryat Gat plant (Courtesy)

Aside from the manufacturing plant in Kiryat Gat, in the northern Negev, Intel has  R&D centers in Jerusalem, Petah Tikva and Haifa.

The Silicon Valley giant currently employs 11,700 people in Israel in its Kiryat Gat plant and development centers across the country, in addition to 1,170 employees of Mobileye, a maker of advanced driver assistance systems which it purchased in 2017 for $15.3 billion.

Intel’s exports from Israel reached $4 billion in 2018, according to the company.

Shoshanna Solomon and AFP contributed to this report.

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