Intel to invest $6 billion in Israel in unprecedented deal

Israel Intel Investment

Israel’s high-level negotiation team is close to securing a huge investment by chip-giant Intel, estimated at over NIS 20 billion ($5.8 billion), according to Israel’s Ministry of the Economy.

The team which sealed the deal included the Minister of Economy himself, Naftali Bennett, and promises continued investment in existing and new Intel plants until 2030. The company recently submitted its final plan to the Israeli government, and is expected to make an official announcement in the coming weeks.

The investment will be split between upgrading the current Intel plant in the southern Israeli town of Kiryat Gat, and building a new plant nearby. Intel has been operating in Israel for the last four decades, and currently employs close to 10,000 workers at four development centers and two production plants. The current investment is expected to create up to 1,000 new jobs, particularly important for the periphery town. To secure the investment, the Israeli government promised Intel a grant of 5% of the cost - up to $300,000, according to Israeli media. The ministry has declined to comment on the details of the grant, while stressing the importance of the investment to the local economy.

"Contrary to Intel's previous investments, we are trying this time to create a long term process, in which each side will commit for at least ten years… we are talking about a manufacturing facility that has incredible impact on the Israeli economy,” said Nahum Itzkovich, the brand new director of the government-supported Economy Investment Center.

The investment is expected to be connected to the production of new 10-nanometer technology, a new way of producing semiconductors, previously thought to be unfeasible because of quantum tunneling effects, but now being championed by Intel and others as the basis for high-performing mobile computing in the future. Currently, production is still underway for 14-nanometer chips, and 10-nanometer technology is the talk of the semiconductor world. If the bid is confirmed, then Israel will have beaten Ireland and the United States, who were also vying for the Intel 10-nanometer investment.

The investment is a welcome step after Intel announced profit losses in the first quarter of 2014, laid off thousands of workers in Costa Rica, and planned to downsize its current operations worldwide, while investing heavily in high-yield future technologies.