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Intel Corporation may have to return part of the government grant it received for the upgrade of its Fab 18 plant in Kiryat Gat if the company were to drastically reduce its Israel workforce.
Intel president and chief executive officer Paul Otellini was expected to announce globally its massive job cuts, speculated to affect between 10,000 and 20,000 employees, in a webcast address to Intel employees after press time Tuesday.
With some 6,700 employees in Israel , the company's local operation is almost certainly going to be affected.
"The grant for the [existing] Intel plant in Kiryat Gat is conditional on their employing a certain number of people," director of the Israel Investment Promotion Center, Hezi Zaieg, told The Jerusalem Post. "If they were to drop below that stipulation, they would not be fulfilling their commitments according to the terms of the grant."
Zaieg referred to a government grant of $200m. in return for a $1.2 billion investment in Fab 18 by Intel whereby the company committed to maintain a workforce of more than 1,800 people.
Zaieg added, however, that he was not concerned that the prospective job cuts would affect the grant.
"I am not worried," Zaieg said. "The Kiryat Gat plant has 2,500 employees, and I do not think they intend to discharge 700 people there alone."
Israel has been a strategic center for Intel, with key developments coming out of its research and development center in Haifa.
Earlier this year, Intel approved an investment of $3.5 billion to build a new chip-making facility next to Fab 18 in Kiryat Gat.
The government committed to give the company a grant of $525m., or 15% of the cost, for the project. The conditions set by the government include a stipulation that Intel employ at least 2,000 people at the plant. An additional 2,000 subcontractors are expected to be employed at the facility.