Israel grants Intel $295 mn to upgrade chip plants

JERUSALEM, ISRAEL: Israel's government approved a 1 billion shekel ($295 million) grant to Intel Corp to invest in two local chip plants, the Industry and Trade and Finance Ministries said on Tuesday.

The ministries said Intel plans to invest about 5 billion shekels and that the grant was conditional on Intel hiring 1,500 people for its Kiryat Gat plant in southern Israel and 600-1,000 more in a new assembly plant in the north.

Intel, which will also receive various tax benefits meant to encourage capital investment, plans an expansion and technology upgrade to produce wafers with 15-nanometre technology at its Fab 28 chip plant in Kiryat Gat.

Last month, the trade ministry said Intel had asked Israel for an unspecified grant, which Israeli media put at $500 million to $960 million since Intel typically asks for 12-20 percent of its planned investment.

The world's No.1 chipmaker opened its $3.5 billion Fab 28 chip plant in 2008 and makes processors with 45-nanometer circuitry.

The Kiryat Gat plant is being upgraded to become Intel's second worldwide that produces the smaller, next-generation 22-nanometer chips at a cost of $2.7 billion.

Israel in January approved a $200 million-plus grant for Intel to upgrade to 22 nanometres.