Let a billion chips bloom: Intel Israel celebrates 40 years

With $35b in exports and 10,000 workers, the company remains an economic force in Israel and impacts the way we use computers

Mooly Eden, president of Intel Israel, talks 3D gesture technology at an Intel Israel event (Photo credit: Courtesy)
Mooly Eden, president of Intel Israel, talks 3D gesture technology at an Intel Israel event (Photo credit: Courtesy)

As Israel’s largest high-tech employer, Intel, more than any other company, has been responsible for Israel’s growth as a tech power, according to Mooly Eden, Intel International Senior Vice-President and CEO of Intel Israel. And it’s the innovation that Intel Israel has come up with that has shaped computing as we know it. “There are two important issues here,” said Eden: “What Intel has done for Israel, and what Intel Israel has done for the world. Both are amazing stories.”

What would Israeli tech look like without Intel? It’s impossible to know, of course, but chances are the picture would be dramatically different. Speaking at Intel Israel’s annual press conference – which this year also celebrated the company’s 40th year in Israel — Eden cited research conducted by Intel that shows the impact of the company on the Israeli economy. “If Israel is the Start-Up Nation, it’s Intel that had a major role in getting it there,” said Eden, citing a list of a list of hundreds of companies, large and small, that were led by entrepreneurs and developers who got their start at Intel. The study shows that some 10,000 former Intel workers have gone on to help establish 30 new high-tech companies every year — creating at least 250 new jobs annually.

Currently, Intel Israel is by far the country’s biggest tech employer, with over 9,800 workers at dozens of locations around the country, mostly at its R&D facilities in Haifa and Jerusalem, and at its chip fabrication plants in Kiryat Gat. Over the past 40 years, Intel Israel has exported $35 billion of goods on behalf of the country, “at least a few percent of the total number of exports over that period,” said Eden.

In 2013, Intel registered $3.84 billion in exports in 2013, which was slightly less than the $4.6 billion exported in 2012; but, said Eden, the reason for that was due to an expected dip in sales, because a significant portion of the company’s production in Israel was in its new 22 nanometer chips, which were uncertified and unshipped until recently. Sales of that inventory will be booked to 2014, so, all things being normal, nominal sales should be higher in next year’s annual round-up. If booked sales were lower in 2013, said Eden, “chip production was up, and those chips will be credited to sales accounts this year.”

Regardless, Intel Israel is a prolific exporter. “One billion chips can’t be wrong,” Eden said, citing the estimated number of microprocessors and processor components Intel Israel has manufactured at its chip fabrication plants — mostly at its two Kiryat Gat facilities — over the past 40 years. “Intel is Israel’s ‘smart chip.’ We have had 40 great years together and are looking forward to the next forty,” said Eden. “For four decades, Intel has spearheaded Israeli high tech, conceiving and developing novel technologies which have placed Israel on the global high tech map and enhancing the strategic leadership of Intel Corporation. The combination of Israel’s capabilities, Intel’s global innovation and ongoing investment in human capital resulted in an unprecedented success story which will continue to unfold in coming years,” said Eden.

As much as Intel has done for Israel, the company’s Israeli teams have done not only for the company, but for computing in general. Eden cited a long list of Israeli-developed chips and technologies that have become the mainstay of the way computers are designed. Going back to 1979, when Intel Haifa developed the 8088 processor – used in the IBM PC, the first popular Microsoft-based computer for home use — Israeli teams went on to develop the more advanced 386dx processor in 1987, the Pentium MMX processor in 1997, the first multicore i5/i7 processors in 2006, and the Clovertrail platform for tablets, to name just a few, said Eden.

“It’s fair to say that these developments were the ones that set the tone for the way we interact with computers today,” said Eden. “For example, the whole laptop revolution was kicked off by the Pentium M (Banias) processor, developed in Israel in 2003.” In addition to hardware design, said Eden, the company was also very involved in software design, security software, networking, and new projects, such as perceptual computing, with Intel designing systems that enable users to interact with computers and devices using gestures and voice.

Israeli design teams are now at work on the next generation of Intel’s core processor, currently labeled Skylake. Design plans are still preliminary, but the design is being led by Israeli engineers, said Eden.

One big question for Intel Israel is where those processors are going to be produced. Intel is currently making up its mind on where its new plant to produce 10 nanometer chips will be built, and part of the decision is likely to rest on where Intel can get the best deal — in terms of grants and subsidies for the plant.

“I believe, of course, that Israel is the best place to build this,” said Eden. “We hope that we work with the government and continue to grow and expand here.” Ireland, where Intel recently built a plant to produce 15 nm chips, is said to be a leading contender for the 14 nm plant with Israel. Currently, the 22 nm chips produced in Kiryat Gat are the company’s most advanced production chips (the 14 nm chips are not yet being mass produced).

A good sign for Israel’s hopeful triumph, said Eden, was Intel’s purchase of the Micron fabrication plant. Several years ago, Micron, another semiconductor and flash memory producer, decided to sell its Kiryat Gat plant, and after some deliberation, Intel decided to buy it, adding the Micron staff of 800 to Intel Israel’s worker pool. “The fact that Intel approved this purchase shows the confidence the company has in the future of operations in Israel,” said Eden.

“The government here, like governments everywhere, know how the game is played,” and the jobs that are generated by investments in development centers is well worth it for Israel — especially, Eden said, when it comes to Intel. “Over the years Intel has invested $10.8 billion in Israel,” he said. “Taking into account all of the services and outside contractors we use, Intel’s activities on Israel is responsible, in our estimation, for some 30,000 jobs in the Israeli economy. Last year, Intel Israel was responsible for more than 9% of Israel’s tech exports, which account for half of overall exports, except for diamonds.”

The issue of grants and benefits for multinationals in general is a sticky one, said Eden, and he is certainly not a disinterested party. “But in today’s world, this is how governments bring jobs in. It’s up to the government to decide, but I think that in terms of investment, Israel gets back a lot more from Intel that it does from other multinationals.”

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