Israeli-made processor responsible for 40% of Intel’s 2011 sales

The company and the country have a deeper relationship than most realize

Top Intel Israel executives speak at Sunday's press conference (photo credit: Courtesy)
Top Intel Israel executives speak at Sunday's press conference (photo credit: Courtesy)

While many people know of the close relationship between Israel and Intel, the depth of that relationship may come as a surprise to many: Intel Israel has been responsible for many, if not most, of the processor breakthroughs for Intel, and the Intel Sandy Bridge processor, developed in Israel, was responsible for 40 percent of Intel’s sales worldwide in 2011.

That fact was revealed Sunday at a press conference in Tel Aviv, where top Intel Israel executives discussed the company’s activities last year and plans for this year. 2012 is set to be an important year for Intel Israel, as the company refits its Kiryat Gat facility to manufacture the new 22-nanometer Ivy Bridge processor. Currently, the Kiryat Gat facility makes Intel’s 45-nanometer Sandy Bridge processor, and the company has invested $3 billion in preparing the facility for Ivy Bridge.

One highlight of the press conference was the introduction of top Intel exec Mooly Eden as Intel Israel president. Eden will share top executive status with general manager Maxine Fassberg. There had been speculation that Intel has been dissatisfied with Fassberg’s leadership of the company, with Eden being appointed to gradually take over operations. At the press conference, however, both Eden and Fassberg praised the appointment, with Eden pointing out that the appointment of a president and general manager was Intel’s way of honoring the Israel facility for its accomplishments.

Fassberg said that Intel Israel had hired some 700 people in 2011 and planned to hire at least 600 more in 2012. Fassberg added that Intel Israel employs nearly 8,000 workers directly, and is indirectly responsible, through suppliers and subsidiaries, for the employment of 23,000 heads of households — and altogether employs 10% of all workers in the electronics and software industry in Israel. Intel employs about 100,000 people worldwide. A special point of pride, she said, was that Intel Israel did not lay off any workers during the 2008-2009 economic downturn. “We had plans ready for all scenarios, but we were able to work things out to ensure that we did not have to lay off even one worker because of the recession,” she said.

Intel Israel is a strong contributor to Israel’s bottom line, said Fassberg, with $2.2 billion in exports in 2011. That was about 20% lower than in 2010, but Fassberg attributed the shortfall to the limited capacity of the Kiryat Gat plant during its refitting for 22-nanometer processors. The company expects to more than make up for it this year as it gears up to sell the Ivy Bridge processors.

Besides Kiryat Gat, Intel has facilities in Jerusalem, Haifa, Petah Tikvah, and Yakum.

Eden presented the company’s plans for 2012, discussing a slew of new products Intel intends to release. Among those products are the Ultrabook, Intel’s answer to small, light laptops like the Macbook Air. The company will be marketing some 75 different Ultrabook designs, so “there will be something for everyone,” Eden said. Besides Ultrabooks, Intel will be pushing forward with completion and development of its smartphone, and later in the year, an Intel tablet will be available. Eden also described a number of software innovations, including an “end-to-end” service that will allow access to data and content along a series of devices via the cloud — similar to current offerings by Apple, which stores data in the cloud and allows users to access it on its line of Macbooks, iPads, and iPhones.

Eden also rejected notions popular in the media, that the PC was outmoded and would die a quick death, and that tablets were going to replace laptops. “There may be some cannibalization at the fringes,” Eden said, referring to a “blurring” of distinctions among some devices. However, all four “device streams” — PCs, laptops, tablets and smartphones — were growing and would continue to grow in tandem. PCs were becoming household necessities and not luxuries, and as such have become a recession-proof product. Regarding tablets, Eden challenged audience members who believe that the tablet is set to replace the laptop to “give me your laptop for two months, and then we’ll see whether or not you don’t need it.”

Eden, who is also an Intel worldwide senior vice president, has been working for Intel in the US since 2003, and was responsible for the sharp growth in notebooks and netbooks for Intel, the company said.

Intel is strongly committed to Israel, Eden said. Israel is the third largest investment target for Intel outside the US — after China and India — and over the past 15 years, the company has invested in 64 different Israeli companies. A big believer in working with start-ups, Eden said that he intended to not only look for companies Intel can work with directly, but for partnerships with other Intel partners around the world for promising Israeli startups. “The most important contribution we can make to Israeli startups is through our rolodex, the connections we have in the industry that we can share with Israeli startups,” Eden said. “We believe in the ‘startup nation,’ and intend to help it reach its full potential.”

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