Grant for new Intel fab in Kiryat Gat approved
Intel will receive a 12% grant on $4.4 billion. The investment will generate a net value of $421.8 million for the economy.
Hadas Manor 14 Nov 05 15:35
The Investment Promotion Center has unanimously approved a grant for Intel’s (Nasdaq:INTC) new Fab 28 in Kiryat Gat. The grant will now be sent to the Knesset Finance Committee for approval. The grant is not part of the Investment Center’s regular budget.
Investment will invest $4.4 billion in the new fab, including a 12% grant. A study by the Industrial Development Bank of Israel (TASE:INDD.P) found the investment worthwhile, even if Intel invests only $3.5 billion. The investment will generate a net value of $421.8 million for the economy, including the creation of 2,400 jobs. Sales by Fab 28 during its production life will be $3.2 billion, all of which are guaranteed exports to Intel overseas.
The investment in Fab 28 includes $760 million in land and buildings, and $2.74 billion in equipment and installation.
Investment Promotion Center director Hezi Zaieg said, “This is a strategic decision by Israel to help the semiconductor industry. From the moment a decision was taken that it was worthwhile to support the industry, we must not back down, because the price would be heavy.”
Zaieg added, “Intel was a catalyst for developing Israel’s semiconductor industry, and for bringing many subsequent foreign investors in other companies, expressing confidence in Israel.”
Prof. Zvi Hadar, an advisor in the study, said during the discussion, “Israel after Intel is not the same country it was beforehand. Intel’s contribution to Israel’s reputation and industry is influential worldwide.”
The Industrial Development Bank study on Intel’s Fab 28 was conservative, and did not take into account the fab’s effect on reciprocal procurements by Intel in Israel. Intel made $1 billion in reciprocal procurements when it built Fab 18 in Kiryat Gat, and is expected to make a similar amount for Fab 28.
Published by Globes [online], Israel business news – www.globes.co.il – on November 14, 2005