Shalom Life | September 27, 2014

Intel to Make $6 Billion Investment in Israeli Tech

The tech company is looking to produce its next generation of chips in Israel, which will create at least 1,000 new jobs in the hightech sector

By: Daniel Koren

Published: September 23rd, 2014 in Business » Israel

Intel to Make $6 Billion Investment in Israeli Tech

Photo Caption: Intel's offices in Israel

Photo Credit: Intel Israel


Earlier this year, U.S. chipmaker Intel announced its plans to invest $6 billion to upgrade its facility in southern Israel, with a plan to "upgrade the Kiryat Gat facility to meet future needs," but without specifying their agenda in full.

Now, reports confirm that new details have emerged regarding the company, which has been operating in Israel since 1974, and employs nearly 10,000 Israelis, and this historic new deal, which was officially announced by the Finance Ministry on Monday.

The Finance Ministry confirmed that Intel will indeed spend $6 billion to upgrade the Kiryat Gat plant, where they, according to experts, will begin developing their next generation of computer chips. As a thank you from Israel (as the move will create hundreds of jobs and bolster the country's hightech sector), Intel will receive grants up to $600 million throughout the next five years.

They'll also receive a major tax break through to 2023.

While some may argue this was an 'expensive' deal for Israel, Finance Minister Yair Lapid said that “Intel’s investment is a strategic asset for Israel,” adding that it “provides additional proof of Israel’s capabilities in high-tech and innovation.”

Over the past few years, Intel has publicly stated its uncertainty of where they will build a new plant to develop advanced 10 nanometer chips, reports the Times of Israel, mentioning it would be located in either Israel or Ireland. Now, all that doubt vanishes, and hundreds of Israelis in the hightech sector will have a chance to work for the prominent company in their new upgraded Kiryat Gat facility.

With the new deal, Intel will get a $300 million grant, which they will be able to spread over the next five years. They will pay a corporate tax of only 5% through 2023 (mind you, the standard rate of company tax in Israel is 26.5%), and will hire at least 1,000 new employees, half of which will most likely be residents of southern Israel.

The company has also stated they will spend a total of at least $550 million over the period, in addition to NIS 400 million on annual local purchases.

“The government here, like governments everywhere, knows how the game is played,” said Intel International Senior Vice-President and CEO of Intel Israel Mooly Eden in response to those critics who might complain at the tax breaks the Israeli government is providing the company with. “Over the years Intel has invested $10.8 billion in Israel. Last year, Intel Israel was responsible for more than 9% of Israel’s tech exports, which account for half of overall exports, except for diamonds.”

According to Finance Minister Lapid, “The plant upgrade will generate 1,000 new jobs, mostly for residents of the south, along with many thousands of supporting jobs. We will continue to work towards the creation of new employment opportunities and investments in the Israeli economy.”

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