By David Shamah for ZDNet
The Israeli government announced on Monday
that it has approved a plan submitted by Intel last April to upgrade its Kiryat
Gat fabrication plant — likely putting to an end the long-running drama of
where the company would manufacture its new 10mm chips.
The chips are seen as crucial to Intel, as
they will feature in the wearable, Internet of Things, and Perceptual Computing
devices that Intel sees a big future in.
Monday's announcement constitutes the Israeli
government's response to a proposal submitted by Intel to spend $6bn to upgrade
the Kiryat Gat plant. No details were given by Intel on what the upgrade would
entail, and the company hasn't yet commented on the Monday announcement,
although an source said that the deal means that it is "practically a sure
thing" that Intel will officially announce it is manufacturing the 10nm
chips in Israel in the coming days.
Although the announcement did not contain any
details of exactly what Intel would be doing at the plant, it said the upgrade
would turn the fab into "the world's most advanced technology for the
production of micro-electronic components".
The deal is a good one for both Intel and
Israel, the country's finance minister Yair Lapid said in the announcement.
Intel gets grants of up to $600m and a substantial discount on corporate tax
rates over the next decade. In return, Intel promises to hire an additional
1,000 workers, and spend hundreds of millions of dollars on products and
services. Whatever Israel loses in the taxes and grants, said Lapid, it would
make up in the enhanced economic activity Intel's upgrade will provide.
Intel, according to sources, has been of two
minds on where to build the 10nm plant – in Israel or Ireland. The two
countries have been lobbying for Intel's business, offering incentives and tax
breaks – as would be expected, said Mooly Eden, Intel's international SVP and
CEO of Intel Israel. At an event in Tel Aviv earlier this year, Eden said that
both governments "know how the game is played. In today's world, this is
how governments bring jobs in".
As an Israeli, Eden, of course, would prefer
to see the plant in Israel, but for Intel the decision was purely economic.
That said, the investment made sense for the government, Eden added.
"Israel gets back a lot more from Intel that it does from other
multinationals. Over the years Intel has invested $10.8bn in Israel. Taking
into account all of the services and outside contractors we use, Intel's
activities on Israel is responsible, in our estimation, for some 30,000 jobs in
the Israeli economy."
The competition between Israel and Ireland for
the new plant has been conducted in a very gentlemanly fashion, with no
name-calling or the like, and in fact there was speculation that it was Ireland
that Intel had chosen for the 10nm plant, after the company announced that it
had spent about $5bn upgrading its Leixlip facility over the past several
years.