"Plan exists for $4-5b Intel investment in Israel"

Intel

The investment target is probably an upgrade of the Intel Kiryat Gat fab to 7-nanometer technology.

Intel is expected to announce investment amounting to $4-5 billion in expanding production is Israel. "The general direction is significant investment by Intel in the Israeli economy, and there's an outline plan for it," a senior government source told "Globes" at the weekend, referring to remarks made on Thursday by Minister of Finance Moshe Kahlon at the Ecosystem Haifa conference, to the effect that Intel was about to invest billions of shekels in Israel.

According to the government source, "Senior Intel Israel managers met the finance minister on Wednesday and talked to him about the matter, and they are due to meet Minister of Economy and industry Eli Cohen this week."

The investment in question is probably an upgrade of the fab at Kiryat Gat to the next, 7-nanometer generation. The current $6 billion upgrade of the fab is to 10-nanometer technology. Intel upgrades its fabs every 3-5 years.

Israel traditionally competes with Ireland in benefits offered to Intel in exchange for investment. The benefits package includes tax breaks on a special track designed for Intel, known as the strategic track. The economic ministries, led by the Ministry of Finance, have been doing background work in the past few weeks in preparation for this decision, among other things using a model built by the National Economic Council for the previous round of investment by Intel, that tests the economic worthwhileness of strategic investments.

"Gobes" has learned that within the past few weeks Intel Israel representatives held a meeting on the matter with Nachum Itzkovitz, director of the Investment Center at the Ministry of Economy.

Despite Kahlon's declaration about new investment by Intel in Israel, there are still question marks over it. The chosen location has not been reported, not has the number of jobs that the project will create. It is not impossible that the investment being discussed is connected to Intel's huge investment in autonomous vehicles through the acquisition of Jerusalem-based Mobileye last year. "Intel is going through a good period and it is a very prominent company in the Israeli economy. All these things presumably add up to high motivation on its part to invest further in Israel," the government source said.

All the same, government sources note that Intel has only just completed the upgrade of its Kiryat Gat fab. Moreover, Intel will be affected by US President Donald Trump's tax reform, which is meant to encourage companies like it to transfer activity to the US.

Earlier this year, Intel reported that since it started to be active in Israel, its investment in the Israeli economy has totaled $35 billion. Intel is the largest employer in the technology sector in Israel, with more than 10,000 employees in the country. According to company figures, in the past decade it has bought goods and services from Israeli suppliers to the tune of $10 billion. Intel Israel's exports totaled $3.6 billion in 2017. Exports since it started activity in Israel over 40 years ago total $50 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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