Industry Ministry Recommends Intel Israel Get $200 Million Grant

Intel is asking for double that figure, but the Finance Ministry objects to spending even that amount.

The Industry, Trade and Labor Ministry is recommending that Intel Israel receive a $200 million grant to expand its Kiryat Gat plant. Intel will invest $2.7 billion in the new plant and agreed to hire 600 people as part of the understanding reached with the ministry. Intel had originally asked for $400 million.

Intel building in Kiryat Gat - Alberto Denkberg
Alberto Denkberg

The Finance Ministry has yet to approve the deal. In fact it objects to the size of the grant. As a result Industry Minister Benjamin Ben-Eliezer presented the agreement directly to Prime Minister Benjamin Netanyahu.

Sources close to Netanyahu said the prime minister supports giving Intel a "reasonable" grant that would enable it to build new plants in Israel, but in return for a long-term commitment to manufacture its most advanced products in Israel for an extended period of time, in return for a state commitment for the grant.

Since the treasury and the Industry, Trade and Labor Ministry cannot agree, Netanyahu will have to be the go-between with Finance Minister Yuval Steinitz. Past practice has been for the cabinet to approve such exceptional or large grants, but usually only after an agreement has been reached between the treasury and the Industry, Trade and Labor Ministry, as the sums involved exceed the budget of the ministry's investment center.

Sources say the Finance Ministry is talking about a $150 million grant for Intel.

Intel also agreed to employ the 2,200 workers presently at the plant past 2016, when its commitment would end. But Ben-Eliezer did not state how long they would be employed in his letter to Netanyahu.

Intel has been operating in Israel for 35 years and employs over 6,700 people. The company received a $525 million grant in 2005 and invested $1.7 billion - including the grant - in its production plants, which employ over 2,500. In 1999 the state gave Intel $600 million and in return the company provided 4,500 jobs and invested $1.7 billion.

Ben-Eliezer wrote Netanyahu: "In its negotiations with Intel, the ministry succeeded in reaching significant achievements. Among other things, it was agreed that the grant would be $200 million, in comparison to the $540 million they are entitled to by law. I want to note that this is an unprecedented investment of $2.7 billion. Also, it was agreed that as part of the expansion of its operations, 600 workers will be added, compared to 400 in the company's original proposal."

Ben-Eliezer said the huge new investment would also add thousands of other jobs indirectly. The ministry also said the taxes Intel will pay on its new operations will more than pay back the amount of the grant, and the state will see its money back in taxes within three years.