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The State of Israel may demand that Intel Israel return money it received if it fires workers in contravention of the terms of the grants it received.

Ministry of Industry and Trade sources warned of the potential consequences if Intel Israel scales back staff as part of the global Intel layoffs.

The Ministry of Industry and Trade will only address the matter if Intel Israel actually fires enough workers to break its agreement with the State.

The ministry is not leaping to any premature conclusions. Intel has scaled back before without the layoffs touching its Israeli staff.

The grants in question do not include the benefits Intel Israel has been promised for building a new plant in Kiryat Gat at a massive investment of $4 billion. But they could imperil the government's support for its existing Kiryat Gat fab, which is where layoffs  could be imposed.

A spokesman commented that Intel Israel is part of the global Intel group, and therefore, global layoffs could affect it as well.

Recently Intel said it would be laying off about 1,000 management staffers around the world, in order to cut costs. The chipmaker is expected to reveal more details of its efficiency measures this week.

In April, Intel admitted to a 38% slide in profits for the first quarter of 2006.