‘Intel picks Ireland over Israel for fab upgrade’

Assembly plant proposed for Beit Shean, but after offers and counter offers, efforts fail to bring more business to Kiryat Gat.

By YUVAL AZOULAI, SHMULIK SHELAH
September 23, 2011 04:12
2 minute read.
Intel

Intel. (photo credit: PR)

 
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Intel Corporation has picked Ireland over Israel as the site for its next generation fab, people familiar with the matter told Globes Thursday. Intel is leaning toward Ireland for the upgrade of a fab for production of 15- nanometer technology wafers, which will replace the current 22-nanometer technology wafers made at the company’s Fab 28 in Kiryat Gat, the sources said.

In June, Intel Israel asked the Investment Promotion Center for a $600 million grant to upgrade and expand Fab 28.

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Intel said the project would create its most advanced fab in the world, adding that the company would invest $4.8 billion of its own money in it. In exchange, Intel promised to hire 1,300 more workers.

This was Intel’s fourth grant application since the mid-1990s. The previous grant, in 2000, totaled $200 million. Intel has invested $2.7b. in the Kiryat Gat fab.

Intel’s grant application was given the cold shoulder by the Finance Ministry and the Industry, Trade and Labor Ministry because of the frequency of the applications for its fabs.

“Intel has gone as far as it can go at Kiryat Gat, and if the company wants to develop its operations in Israel, it should do so in other locations, such as in the North or in an Arab town,” one source said.

In July, the Finance Ministry and the Industry, Trade and Labor Ministry made a counter-offer to Intel Israel: In exchange for new investment in Kiryat Gat, it would receive a relatively meager NIS 1b. grant, of which NIS 700m. would be used to set up operations in Beit She’an and the rest for upgrading Fab 28. The idea of setting up shop in Beit She’an was intended to create jobs there.

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Intel Israel thoroughly reviewed the proposal, and general manager Maxine Fassberg and other executives toured the proposed site, including its water and electricity infrastructures and access roads.

A senior government source involved in the talks with Intel told Globes Thursday the company had decided to upgrade its Irish fab instead.

“Intel will only officially announce its decision at the end of the year, but we understand from the spirit of the talks that it’s going to Ireland,” the source said.

Despite Intel’s decision to upgrade its Irish fab, the ideal of building an assembly plant in Beit She’an is still on the agenda, and the Investment Center never linked it with the proposal to expand the Kiryat Gat fab.

“On the contrary,” a source said, “from what we’ve heard in recent weeks from the company, it is very interested in this option, and it strongly wishes to move forward in negotiations on an agreement for possible future operations in Beit She’an.”

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