Gov’t offers Intel NIS 1b. to expand

Inducement is for company’s Kiryat Gat plant and new one in North.

By YUVAL AZULAI, GUY KATSOVITCH/GLOBES
Intel 311 (photo credit: Intel Israel)
Intel 311
(photo credit: Intel Israel)
The government is offering Intel Corporation NIS 1 billion as an inducement for further investment in operations in Israel, the Industry, Trade and Labor Ministry announced Tuesday.
Finance Minister Yuval Steinitz and Industry, Trade and Labor Minister Shalom Simhon decided Tuesday to approve in principle the NIS 1b. grant to the semiconductor giant for expanding its plant in Kiryat Gat and constructing a new assembly plant in the North. The total investment in these facilities will be more than NIS 5b., the Industry, Trade and Labor Ministry said.
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As a condition of the grant, Intel will be required to employ 1,500 additional workers in Kiryat Gat and 600 to 1,000 new workers in the North.
Intel will also be entitled to tax breaks in accordance with the Law for the Encouragement of Capital Investment. It will become the first company to gain the status of a special preferred enterprise under the amendments to the law.
Two months ago, Intel applied to the Industry, Trade and Labor Ministry for a grant for the expansion of its existing fab in Kiryat Gat, which would enable it to manufacture with its most advanced technology. At the same time, the company announced it was considering setting up an assembly plant in the North.
A joint committee of the Finance Ministry and the Industry, Trade and Labor Ministry considered the request, taking into account various considerations, including the creation of jobs, promotion of technological innovation and boosting productivity.
For the first time, the team also examined the relationship between the tax benefits that the plants would receive and the size of the grant to be awarded.
In accordance with the team’s recommendations, the ministers have decided on a three-stage budget: up to NIS 550 million for investment in Kiryat Gat; an additional NIS 550m. for setting up a plant employing at least 600 workers in the North; and an additional NIS 150m. for expanding the number of people employed in the North by a further 400. The required period of employment is at least 10 years. The grant will be paid to the company starting in 2014, in accordance with progress in carrying out the investment.
The grant requires the approval of the Industry, Trade and Labor Ministry’s Investment Promotion Center.
“If Intel responds positively to the proposal, it’s something big, because our offer on assembly of the company’s products in Beit She’an competes with opportunities for it in China,” a senior government official told Globes Tuesday.
“The ball is now in their court. We’ll be very glad if they play it in the right direction.”
“Intel’s investment in its plants in Israel indicates confidence in Israel’s economic strength,” Steinitz said. “Construction of the plant in the North will represent a strategic base in the area, will help expand employment there and help to strengthen the periphery in general and the North in particular.”