Intel Slates $5 Billion for Investment in Israel by 2020

In exchange for the semiconductor giant's investment in its Israeli fabrication plant, the gov't will offer a subsidy that is expected to reach $400 million

The logo of Intel, the world's largest chipmaker, is seen at their offices in Jerusalem.
\ RONEN ZVULUN/ REUTERS

Intel, the U.S. semiconductor giant, plans to invest $5 billion in Israel through 2020 to expand its fabrication plant in the southern town of Kiryat Gat, Intel Israel executives told Economy and Industry Minister Eli Cohen on Wednesday.

The government will, in exchange, offer an investment subsidy that will probably be in the range of $400 million. That would be the single biggest grant Israel has ever awarded a company. Intel’s last big investment program — $6 billion, undertaken approved in 2014 — won $300 million in state aid.

Intel will also enjoy tax breaks as part of the aid package, which the government is offering under the Law for Encouraging Capital Investment. In 2014, the company was approved for a corporate tax rate of only 5% for a 10-year period.

“Intel’s decision to continue making significant investments in Israel is an important vote of confidence in Israel and the Israeli economy,” Cohen said after a meeting with Yaniv Garty, CEO of Intel Israel, and Daniel Benatar, manager of the Kiryat Gat plant.

Reuters reported that a spokesman for Intel in Israel declined to comment. But Intel has said it plans to upgrade the Kiryat Gat facility to 10-nanometer technology from 22-nanometer, making chips that are smaller and faster.

With its Kiryat Gat plant and a handful of research and development centers around the country, Intel is Israel’s biggest high-tech employer and one of its biggest exporters. At the end of 2017, Intel employed about 11,000 people and another 1,000 at Mobileye, the Israeli automotive tech company it acquired a year ago. Intel’s exports of semiconductors reached $3.6 billion last year, up from $3.3 billion in 2016, boosted by the launch of a new generation of processors.

Since it first arrived in Israel some 45 years ago, setting up a R&D center, Intel has invested some $17 billion in plants and development centers and has received about $2 billion in grants.

Intel’s application for state aid will be weighed over the next month by a committee with representatives from the finance and economy ministries as well as the Israel Tax Authority. If approved, the proposal will be evaluated by the Economy Ministry’s Investment Center. The final amount of the grant will depend on Intel’s hiring and salary commitments.