Intel to invest an 'unprecedented' $11 billion in Israel operations

Prior to Monday's announcement, Intel had invested an estimated $38 billion in Israel since it first established its presence in the country in 1974.

 Intel Corp's existing Kiryat Gat production facility  (photo credit: INTEL SPOKESPERSON DEPARTMENT)
Intel Corp's existing Kiryat Gat production facility
US technology giant Intel Corp is to invest an “unprecedented” NIS 40 billion (approx. $10.9b.) in the company’s Israel-based operations, Finance Minister Moshe Kahlon announced on Monday night, significantly expanding its multi-billion dollar presence in the country.
“This is huge news for everyone who cares about the State of Israel, the Israeli economy and Israeli citizens,” Kahlon said, adding that the “unprecedented decision” following a year of government efforts would likely create thousands of jobs for residents of the South.
Kahlon disclosed on Tuesday that Intel will receive a grant of about $1 billion from the Israeli government for its investment plan.
“The moment the company comes to Israel and invests $10 billion, and it receives a grant of 9%, that means 91% of it stays here,” Kahlon said in an interview on Army Radio. “There are always such discounts, there are always incentives.”
This is in addition to an NIS 700 million grant the company will get in return for a separate $5 billion expansion of its production operations in Israel.
Kahlon’s spokesman told Reuters that the government and Intel had agreed on the size of the grant after talks regarding the new factory had intensified over the past year. He noted that grants were crucial for Israel to compete with countries such as Ireland to win the investment.
The expansion is expected to add 1,000 new employees to Intel’s workforce of nearly 13,000 in Israel, the spokesman said.
While the Santa Clara-headquartered chip maker has said it will “not publish details at this stage” regarding finances, plans or a timeline for the investment, Israeli media reported that it is planning to use its largest investment in Israel to date to construct a vast production facility in the southern city of Kiryat Gat.
“Our continued confidence in Intel’s future and excellent partnership with the State of Israel is at the foundation of the business plan we will submit,” said Yaniv Garty, Intel VP and Intel Israel general manager.
“This plan, when it comes to fruition, is expected to yield great economic and social value for Israel in general and for Kiryat Gat in particular.”
The new factory is expected to span some 370,000 sq. m., and the land will be allocated by the government without having to go through a tender process.
Intel also announced Monday that its exports from Israel in 2018 totaled $3.9b., an increase of $300 million compared to 2017, in addition to local procurement of materials and services – primarily in the periphery – worth $1.7b.
“Intel’s choice to continue to significantly invest in Israel is an important expression of confidence in the State of Israel and the Israeli economy,” said Economy Minister Eli Cohen, who in December alluded to Intel making a further significant investment in the country. “We see Intel as a partner for progress... its renewed choice to invest in Israel strengthens the economy and employment in Israel, and we expect that this collaboration will also continue into the future.”
Symbolizing the company’s decades-long and multi-billion dollar collaboration with Israel, estimated to be worth approximately $50 billion once the latest investment is finalized, Intel held its annual high-level strategic meeting in the country for the first time last year.
“I think we are proving in our cooperation that the future belongs to those who innovate,” Prime Minister Benjamin Netanyahu told interim Intel CEO Robert Swan and senior executives during their visit, marking almost 45 years since the company first established a presence in Israel in 1974.
“Intel is an innovation company, Israel is the innovation nation: I think we have just begun,” Netanyahu said.
Reuters contributed to this report.