Are Kiryat Gat's 1,200 Micron workers in Intel's hands?

Intel Israel has asked Micron Technology Inc. for the return of the land on which the Micron fab faced with closure stands.

Have the employees of the Micron facility in Kiryat Gat become hostages in Intel's battle over the next fab it plans in Israel, on the eve of the decision about the fate of the Micron fab? This is the feeling that has been in the air in the past week for the 1,200 Micron employees, after Intel Israel approached Micron head office in the US with a request to receive back the Micron fab, which was leased to Micron several years ago.

Intel refused to respond on the matter, while Micron Israel said, "We cannot comment on business negotiations. The negotiations on the sale of the fab in Israel is being conducted between prospective purchasers and Micron Technology Inc."

Last December, Micron Technology Inc. decided to stop production in Israel, and to shut down the fab within two years if it was not sold. The fab was constructed in 1998, and was then known as Intel Fab 18. It produces components for memory chips using technology that is no longer at the forefront of semiconductor manufacture.

Over recent months, attempts have been made to sell the fab for a price in the tens of millions of dollars. Among the entities that have made offers are Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM),Maxim, and a group led by the management. The deadline for a decision on the fab's future is June. If no solution is found for continuing operation of the production lines, the employees, along with 600 others employed indirectly, will be liable to find themselves without jobs.

As a condition for selling the fab, Micron is demanding that the buyer should continue operate it for the next eighteen months for Micron customers. The buyer will also be required to take on various costs connected to commitments to the employees (costs that Micron is trying to prevent though a sale). Against this background, Intel asked for the return of the fab, in exchange for continued operation of the machinery.

After that, it is believed, Intel will be able use the land for construction of its next Israeli fab in 2014-2015, improving the chances that the fab will indeed be located in Israel. It Is not clear whether this scenario includes employment of some of the Micron workers, but certainly a substantial portion of them will become jobless in this event. If Intel does continue to operate the fab for the next year or two, 600-700 Micron workers will presumably continue to be employed there, but it is hard to guess what will happen afterwards.

Intel's current fab in Kiryat Gat, Fab 28, employs 3,500 people. Last year, Intel Israel missed out on construction of the company's new fab producing silicon wafers using 14 nanometer technology to Ireland. Intel Israel president Mooly Eden has said in the past that "it would be very worthwhile for the company's next fab to be here."

Intel's only comment on what is happening at its neighbor, the Micron fab, came at its annual press conference in February, when Intel Israel plant manager Maxine Fassberg said in response to a question on the matter, "Micron is an independent company. We are not part of its management, and so we respect its ability to deal with the situation, and when decisions are made, we'll respond. The question ought to be directed to Micron Israel's site director Yonathan Wand."

Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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