Finance Demands Industry Pay 40% of Intel Grant

U.S.-based multinational Procter & Gamble is allying with Israeli companies for research and development. The company is expected to sign an agreement today joining the Ministry of Industry, Trade and Labor's corporate R&D cooperation program, run by the ministry's chief scientist.

Eli Opper, the incumbent chief scientist, will sign the agreement for the Israeli government. For Procter & Gamble, the agreement will be signed by Werner Geissler, vice chairman of Global Operations. Industry Minister Benjamin Ben-Eliezer will also be present at the signing, which will take place in his office in Tel Aviv.

In other news, it seems the ministry will have to shoulder 40% of the cost of an Israeli government grant to Intel Corporation.

The dispute between the industry and finance ministries over whose budget should cover the Intel grant has held up the chipmaker's formal announcement of expanding its fab in Kiryat Gat.

The two ministries agree that Intel should get NIS 678 million, based on total investment by the U.S.-based giant of NIS 2.7 billion (including the government's share ). Intel will get NIS 63 million more from the Israeli government if it sets up an R&D center in the outskirts of the country.

The question is who pays. Finance has been insisting that Industry shoulder 40% of the grant from its own budget, while it would draw the other 60% from the national budget over three years.

Originally Intel asked for $400 million as a grant, for which it undertook to create 400 new jobs. In talks with the Industry Ministry, Intel agreed to halve its request but then only promised to create 250 jobs. The Finance Ministry then lowered the grant to $188 million, which is NIS 678 million.

Intel has a number of plants around Israel, including facilities in Jerusalem. The expansion in question is confined to Kiryat Gat.