Intel to end production in Jerusalem

The decision marks the end of an era for Intel, bringing to a close the activities at the company's first production site built outside the US some 22 years ago.

intel logo upfront 88 (photo credit: )
intel logo upfront 88
(photo credit: )
Intel Israel will stop production at its Jerusalem Fab 8 facility at the end of the year as it completes the phase out of its activities in the automotive market. "We decided to close the 6-inch technology activities all over the world and will end production of the 'Legacy' product at the end of 2007," Alex Kornhauser, VP and general manager of Intel Israel said Sunday at a press conference at the Intel Kiryat Gat campus. "Our approximately 300 workers there will be offered positions in other Intel operations and we are now exploring alternatives on what to do with the site.| Yitzhak Ohayon, general manager of Fab 8 said the move follows a decision by the chipmaker made some 10 years ago to get out of the micro-controller-to-automotive market and noted that the company hadn't invested in the technology or a new product line since then. Ohayon stressed, however, that the research and development facility on the Jerusalem campus would continue to function with its 450 workers. The decision marks the end of an era for Intel, bringing to a close the activities at the company's first production site built outside the US some 22 years ago. It comes as construction is well under way of Intel's newest and largest facility to date - Fab 28 in Kiryat Gat - and on the backdrop of a significant year for production and R&D coming out of Intel Israel. During a tour of the site for journalists on Sunday, Maxine Fassberg, VP and general manager of Fab 28, said the plant would start producing 45-nanometer technology in March 2008 and begin its ramp up to full capacity of 6,700 wafers a week around June 2009. Kornhauser, meanwhile, dismissed concerns about future production at the existing Fab 18 facility in Kiryat Gat, noting that the company has invested $600 million to upgrade the plant to manufacture 65-nanometer micron technology. Kornhauser would not comment on reports last week in The Jerusalem Post that the company plans to sell its NOR flash unit to partner its production with that of another company and a private investor group. However, in a January 16 earnings conference call with investors, Intel said the company was dedicated to turning around "disappointing" fourth quarter activity in the NOR flash business. NOR flash memory chips are produced at Fab 18 and other sites around the world and are used to store programs in cell phones and other electronic devices. "We've got to figure out whether we have to resize the business or if there's some way to restructure it to make more sense for us," said Intel CFO Andy Bryant in the conference call. Looking at the company's operations in Israel, Kornhauser called 2006 "the best year Intel has had in its history of being in Israel." "It was a year in which we brought to market products that changed and enhanced Intel's position against its competitors in all areas of the market around the world." Among the Israeli developed-products that Kornhauser referred to that hit the market in 2006 were the Yonah and Merom products for mobile computers, the quad core microprocessors for servers "Sossoman, Woodcrest and Clovertown" and the quad 2 core processors for desk top computers |"Conroe and Kentsfield." As a result, the company's local operation produced exports of $1.3 billion in 2006, showing growth of 9.2 percent over the previous year, and thereby accounting for 8.5% of Israel's total software and electronics exports, according to Kornhauser. While Kornhauser said the numbers would grow at the same rate in 2007, he added that the local operation was expected to erupt when it starts operations at the new Fab 28 plant next year. The opening of the factory will bring another 2,000 workers to Intel some 1,500 subcontractors and Kornhauser said it would boost Israeli exports to 2000 peak levels of over $2b. Entering 2007, he said, the company has 6,820 workers in Israel compared to 6,600 at the start of last year, including 450 employees at the Petah-Tikvah facility it sold to Marvell last year as part of a worldwide divestiture of its communications business. Laura Rheinheimer and Bloomberg contributed to this report