Intel Corp. (Nasdaq: INTC) estimates that it has invested in Israel more than $5.75 billion since launching activity in the country, including $2 billion in building the new Fab 28 in Kiryat Gat. The company has obtained nearly $1 billion in Israeli government grants and expects the figure to reach $1.4 billion when Fab 28 in completed. The company has also purchased $1.1 billion worth of goods from Israeli vendors.
Intel Israel had $1.54 billion in exports in 2007, 18.4% more than in 2006, making the company one of Israel's largest exporters.
2007 was a stormy year for Intel Israel. The year included an announcement that it would close the ten-year old Fab 8 in Jerusalem, which is being replaced by Fab 28. Intel, STMicroelectronics NV (NYSE; Euronext: STM), and Francisco Partners have set up a flash memory joint venture, called Numonyx, which will take over Intel's Fab 18 in Kiryat Gat.
The closing of Fab 8 was perceived as muscle-flexing by Intel against the government in an effort to obtain more grants and incentives. It worked; last week, the company reached an agreement with the Investment Promotion Center and the authorities under which Intel will replace Fab 8's production line with a new one in exchange for a $150 million tax break. The site will be renamed International Die Prep Jerusalem (IDPJ), and become a preparation plant where wafers are protected from handling-induced defects before packaging.
Fab 8, which mostly produced circuit boards for the car industry, will cease production in March. $650 million was invested in Fab 8, which generated $4 billion in exports over its lifespan.
Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2008
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