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News : Innovation Last Updated: Oct 4, 2013 - 7:50 AM

Intel in talks with Israel on $10bn investment
By Finfacts Team
Jul 11, 2013 - 11:38 AM

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Intel, the US chip computer giant, is reported to be in talks with Israel on a new $10bn investment in the country.

Intel is among Ireland's largest industrial employer and in terms of jobs (about 2,500), it is in the top 10 in the FDI (foreign direct investment) rankings with Henry Ford's tractor plant which he built in his father's home county of Cork in 1917 on top.

Last January, Intel Ireland was granted planning permission for the construction of a new fab plant where it will produce the next generation of 14 nanometer processors.

An official confirmation of the project would provide additional jobs of about 800 and thousands of construction jobs.

In August 2010, Paul Otellini, the then CEO, said at the Technology Policy Institute's Aspen Forum: "I can tell you definitively that it costs $1bn more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States."

Ninety per cent of that additional cost of a $4bn factory is not labour but the cost to comply with taxes and regulations that other nations don't impose."

A senior official in the Israeli economy ministry told Yedioth Ahronoth - - Israel's most widely-read daily newspaper - - last week, that the government is in negotiations with Intel.

"Intel is talking with us about a huge investment of $10bn," Nahum Itzkovich, the new director of the economy ministry's Investment Centre, said in his first interview since assuming office. "We are engaged in intensive negotiations with Intel."

Under discussion is an investment of $3bn to upgrade the existing Fab 28 factory in the southern town of Kiryat Gat, and another $7bn in a new factory in the town over the course of 10 years, he said.

Yedioth Ahronoth reported last February that Intel's exports, which rose 109% from $2.2bn in 2011, were boosted by the start of production of chips using 22 nanometer technology at its Kiryat Gat plant, which is now operating at full capacity.

Intel, the world's No. 1 chipmaker, will build chips over the next two to three years with features measuring just 14 nm in Ireland and the United States, but the company is already thinking about where it will produce 10 nm chips. The narrower the features, the more transistors can fit on a single chip, improving performance.

Intel Israel executives said they would like to see 10 nm production in Israel.

"The average life of a technology is two to six years so we need to be busy to get the next technology, 10 nanometer," Maxine Fassberg, general manager of Intel Israel, told a news conference. "We need to get a decision far enough in advance to be able to upgrade the plant. So for 10 nanometer, decisions will need to be made this year."

Intel has invested $10.5bn in Israel in the past decade, including $1.1bn in 2012, and has received $1.3bn in government grants.

The company accounted for 20% of Israel's high-tech exports last year and 10% of its industrial exports, excluding diamonds.

Last Friday Yedioth Ahronoth said that parts of Haswell processor, which is making its way to nearly all new computers around the world, was developed by team of 80 Israelis in chip giant's Haifa, Yakum centers.

ZDNet, the online tech service, says: "Intel, has been instrumental in the company's catch-up efforts, with Israeli teams producing its system-on-a-chip (SoC) chipsets, combined Bluetooth-and-Wi-Fi chips, connectivity systems (in the form of Thunderbolt), and more.

The fruits of its labours are now beginning to show. Samsung recently introduced its Galaxy Tab 3 tablets, all of which use Intel's Clover Trail+ line of SoC processors - - developed by teams led by Intel in Jerusalem. And while many devices (including those made by Apple, Qualcomm, and many others) have 'Israel Inside' technology, the development of Cloverview SoC's had some unique aspects, according to Aviad Hevrony, the front end design manager for Intel Israel's Cloverview team."

Intel's last overseas investment was made in Ireland and if it does not build a factory in Israel this time the country could find itself no longer relevant to Intel, Itzkovich said.

"We are talking about a manufacturing facility that has incredible impact on the Israeli economy," he said. "That said, it is incumbent upon us to examine the worthwhileness and to explain to the public what the benefits are and what the considerations are if we approve the investment."

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