The $400 million grant that Intel Corporation (Nasdaq: INTC) is asking from the Israeli government for the expansion of the company's Fab 28 in Kiryat Gat is the subject of intense debate at the Ministry of Industry, Trade and Labor's Investment Promotion Center. What Israel will receive in return for the grant is one of the main factors in these discussions.
Sources inform ''Globes'' that the Industry Ministry intends to demand that Intel should commit to building a new fab in Beersheva or the far north within 10 years.
Intel wants the grant to expand Fab 28 by upgrading its processor production lines to 22 nanometer technology. Intel Israel general manager Maxine Fassberg estimate the cost of the upgrade at $2.7 billion, and the company wants to get 15% of the cost in a government grant. 22-nanometer processors are due to reach the market in 2012, and Intel plans to build to fabs to manufacture them, one of which will be either in Israel or Ireland.
The Investment Promotion Center is due to decide on the grant within a month or two. Sources say that the Ministry of Industry is not happy that Intel wants the new fab to be in Kiryat Gat, because the town is not in the "real periphery", and is therefore demanding a different site, where the fab will be the economic anchor for the region.
The final decision will probably fall to Prime Minister Benjamin Netanyahu, as was the case in the past, because approving a grant of this size exceeds the authority of the Ministry of Industry, and requires the prime minister's intervention.
The Ministry of Industry said in response that the Investment Promotion Center was reviewing the matter.
Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2010
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