Teddy Sagi floating SafeCharge on AIM
Intel has rejected the Israel's offer of a NIS 1 billion grant to expand the Kiryat Gat fab and build a new fab in Bet She'an.
Intel Corporation (Nasdaq: INTC) has rejected the Israeli government's offer of a NIS 1 billion grant, to expand its Kiryat Gat fab and build a new fab in Beit She'an, and will build the next-generation 14-nanometer technology fab in Leixlip, Ireland, at an investment of €1 billion. The new fab will be Intel's state-of-the-art fab in the world.
Meanwhile, Intel is in talks on a grant, for an undisclosed amount, to build its next-generation fab, with 10-nanometer technology, in Israel.
Intel's decision to invest in Ireland was announced by CEO Paul Otellini at an investors meeting two weeks ago. The decision was made even as Israel's Ministry of Finance and Ministry of Industry, Trade and Labor were embroiled in a brawl whether to meet Intel's demands for a grant in full. At the same time, Minister of Finance Yuval Steinitz opened a secret channel with Intel executives, for which top Ministry of Industry officials lambasted him.
"We knew nothing about Intel's final decision on this matter. We did not even receive a response from the company about the offer of the inter-ministerial committee, which reviewed Intel's request for a government grant, sent to it a year ago," a top official involved in the matter told "Globes".
Last year, Intel opened clarifications on its request for a $600 million government grant, as part of a $4.8 billion investment to upgrade its fab in Kiryat Gat. The Ministry of Industry's Investment Promotion Center, which had previously approved a $200 million grant for an upgrade at the fab, decided to review the company's conduct. Following this review, it told the company that it would get a smaller grant, and with strings attached. The Ministry of Industry offered a NIS 1 billion grant, of which NIS 300 million must be used to expand the fab in Kiryat Gat, and NIS 700 million used to open a new fab in Beit She'an. Intel has not yet delivered its response to the offer, and there have been reports that it will invest billions of dollars in Ireland instead.
Intel, raised eyebrows over the Israeli government's low offer, but outwardly stayed silent about the government's attitude toward the company. It repeatedly delayed announcing its final decision whether to invest in Israel or Ireland, even as signs began to emerge in September 2011 that it would pick Ireland. "Globes" reported these assessments at the time, based on Intel's wish to upgrade its Irish fab, which had last been upgraded in 2004.
"We did everything to make an attractive offer to Intel," a top government official told "Globes". "In this case, we could not be more attractive than Ireland."
The details of the Irish government's incentives offered to Intel to upgrade its Leixlip fab are still unclear. However, sources close the company explicitly said in the past that Intel acted like any other business, and handled its affairs on the basis of economic feasibility and value of opportunities made available to it.
An Israeli government source said today that the Irish successfully tempted Intel with tax breaks, rather than grants. "In contrast to our offers, which were monetary grants, the Irish offered tax breaks up to the amount of the grant. This means that Ireland is not investing capital in the company, but is offsetting it each year. Since in this case we're talking about a fab upgrade rather than construction of a new fab which requires investment in infrastructures, the arrangement was convenient for the company," he said.
Talks on a new fab
Top Israeli economic officials had thought that the tax pre-ruling which Intel is seeking, and which "Globes" revealed last week, for a NIS 3 billion tax break to export NIS 12 billion in accumulated capital, was partly intended to finance the Irish fab upgrade. Other sources disagreed, saying that Intel was trying to obtain a tax credit on accumulated capital in the US, under a new US law, and that the company would subsequently invest in Israel.
Intel's decision to invest in Ireland is a bitter blow to Beit She'an. For months, residents had hoped that the company would build its new fab in the town, which would serve as a basis for the opening of other plants, creating well-paying jobs.
Meanwhile, Intel executives, including Intel Israel general manager Maxine Fassberg, have been in talks with Steinitz over a future investment of $5-10 billion to build the next-generation 10-nanometer technology fab in Israel.
Sources familiar with the issue say that decisions on the fab will be made over the next 2-3 years, and that Israel will have to make a more attractive and competitive offer than offers of other countries, in order to benefit from such a large investment, which will create tens of thousands of jobs directly and indirectly.
The talks between Intel executives and Steinitz are focusing on building the next-generation fab in Kiryat Gat. Intel executives are due to meet Ministry of Industry officials in a few days. The talks will come in the wake of the bitter dispute between Ministry of Industry and Ministry of Finance officials over Steinitz's secret talks with the company.
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
You comment was recieved and soon will be published.
Load more comments
The online clearing solutions company will reportedly try to raise $100 million in London.
Wibiya founders leave ConduIT, start weight loss co
Dror Ceder, Daniel Tal and Avi Smila left ConduIT two months ago..
XL Media plans London IPO at $100m value
The Israeli gaming marketing company will attempt to raise $30-40 million on the AIM.
mobli first co to list on Nasdaq Private Market
The market allows the company's employees to trade options and shares.
"Home prices driving tech workers overseas"
Leumi deputy CEO Daniel Tsiddon: The rise in home prices in high-tech areas in Israel is costing human capital.
Fintech co Payoneer raises $25m
Susquehanna Growth Equity led the round.
Camtek, AudioCodes set for secondary offerings
Magic Software increased the amount it raised to $58 million, after the underwriters exercised their over-allotment options.
Perion in talks to buy Airpush for $170m - report
"Techcrunch" says Perion is close to acquiring the digital ad company.
Israel is a nanotech nation
206 nanotech start-ups have been founded in the past six years
Ototo promotes public transport on demand
The app uses crowdsourcing to identify demand for passengers and sends a bus.
3D printer maker Stratasys sees growth continuing in 2014
Non-GAAP net profit rose to $82.1 million in 2013 ($1.95 per share) from $59.7 million in 2012.
Elbit Systems invests in nanomaterials co CENS
Cluster Engineered Nano Space (CENS) is in Elbit's Beersheva Incubit incubator.
Ron Lauder invests in Nielsen Innovate incubator
Ron Lauder is investing in the Caesarea incubator through R&R Venture Partners.
Parking app co Pango raises $6.5m
The company will use the proceeds to develop smart parking applications.
Compugen raises $63m, Magic $51m
The two companies held secondary offerings on Nasdaq on the basis of shelf prospectuses.
Varonis doubles on first day on Nasdaq
The company, founded in Israel, provides security solutions.
Amdocs CEO: We strive for 5% annual growth
Eli Gelman fears complacency as the company expands in emerging markets.
Intel Israel development center to remain vital
Intel Israel president Mooly Eden tells "Globes" that Israel remains central to the chip company's plans.
SuperCom share price skyrockets 920%
SuperCom CEO Arie Trabelsi tells "Globes" how he has turned around the identity solutions company.
IMI enters cyber security arena
As privatization approaches, Israel Military Industries bets on a market with enormous growth potential.
Wanted: Arts majors for high-tech
Technology companies are looking for creativity, flexibility, and the ability to think outside the box.
2013 boom year for Israeli high-tech
In the first half of the year, there was a 52% rise in demand for mobile and web developers, and salaries are up as well.
CyberArk reboots network security
CEO Udi Mokady: Media reports on electronic surveillance make explaining our product unnecessary.
Architect Eli Attia: Google stole my life's work
Eli Attia has developed an innovative building design and construction concept that Google sees generating $120 billion annually.