Intel Seeking $400 Million Grant to Expand Kiryat Gat Facility

Chipmaking giant Intel is asking the state for a $400 million grant to expand its plant in Kiryat Gat, sources involved in the discussions said.

Two senior Intel executives are slated to arrive in Israel today to discuss the matter with government ministers. The company has already submitted a formal application to expand the factory and is asking for a special grant to finance the project.

The idea of increasing the factory's operations via a $2 billion investment was first brought up in April 2009. Of this total, the company hopes to receive $400 from Israeli taxpayers in the form of a grant.

Sources involved in the talks said yesterday that Intel would be willing to increase its investment even further, thus enabling the company to hire an additional 200 employees. In that case, the government would be asked to increase its contribution as well.

Intel currently employs about 2,300 people.

The senior Intel executives will meet with Finance Minister Yuval Steinitz and Industry, Trade and Labor Minister Benjamin Ben-Eliezer in an attempt to persuade them to support the request despite the huge size of the grant. Both the Finance Ministry and the Industry Ministry must approve the request, and after that, the full cabinet must do so as well.

The Industry Ministry's Investment Center has expressed its support for giving Intel a grant to expand the factory in the past. However, many Finance Ministry officials object to providing a grant of hundreds of millions of dollars to a single company, and the Intel executives are likely to hear these objections detailed in their meeting with Steinitz.

Intel has been the recipient of unusually large grants, totaling hundreds of millions of dollars, for each investment it has made in the past, and this has sparked considerable public criticism. Nevertheless, the government apparently places great importance on the image created by Intel's investments here, which position Israel at the forefront of the global high-tech industry.

Figures provided by Intel project that the proposed $2 billion investment would allow it to increase its sales in 2012 by $3 billion. Intel manufactures more than $1 billion worth of chips in Israel annually.

Intel declined to comment on this report.