Points of light for Intel Israel

Pat Gelsinger  credit: Intel
Pat Gelsinger credit: Intel

Intel Corp's financials were predictably bad, and doubts hang over the Tower Semiconductor acquisition, but the news is not all gloomy on the Israel front.

Intel Corporation’s financials released last week were bad and predictable to the same degree. Intel went into the economic slowdown of 2022 still battered by a leadership and technology crisis that eroded its innovative edge, production capacity, and profitability in comparison with its competitors in the semiconductor market such as Nvidia, AMD, Arm, and TSMC.

Analysts estimate that although the worst is not yet behind Intel, the bad times will not continue for long. If the stock market is to be believed, there is general optimism about the company.

So far this year, Nvidia’s share price has risen by 42%, AMD is up 18%, and even Intel was rising, by a decent 12%, until it published its financials on Thursday. Following that, its share price dipped by more than 6%, but the assessment on the market is that the trend will reverse.

Shahar Carmi, a senior analyst at Psagot Investment House, says, "2023 can be expected to be a mirror image of 2022: the first half will be weak, and the second half will be marked by recovery."

The collapse in Intel’s revenue and international status could have effects in Israel. The last quarter will undoubtedly impact Israel’s macro-economic figures. The placing of workers at the company’s Kiryat Gat fab on unpaid leave and the shutdown of some production lines, even if only temporary, presumably reduced exports of semiconductors from Israel in that period. That will affect Israel’s foreign currency reserves and export figures, as the Kiryat Gat fab supplies chips to the tune of billions of dollars to Intel Ireland.

Intel has announced that the closing of its deal to acquire Israel’s Tower Semiconductor may be postponed. If the deal is cancelled, the company’s business in Israel could also be damaged.

Intel is still a profitable company, and as such could not avoid paying dividends or bonuses to employees, although it is believed that the bonus will decline.

Despite all this, and despite the departure of Intel Israel CEO Yaniv Garty, and the announcement that the expansion of the development center in Haifa will not go ahead, there are several points of light for Intel’s Israeli employees.

First of all, Israeli subsidiary Mobileye again beat the estimates and remains Intel’s fastest growing unit, while the Sapphire Rapids server and workstation processor, which was developed in several countries including Israel, has finally been launched and has won positive reviews.

Intel’s Israeli development centers are also putting their hopes in what Intel sees as its answer to Apple’s M2 processor, Lunar Lake, due to be launched nest year for low-power mobile devices.

Finally, Intel has high hopes for its new fab in Kiryat Gat, which will probably be inaugurated in 2027. Sources inform "Globes" that within the past few months Intel Corporation has bought the most advanced machines in the world for producing microchips using ultraviolet lithography technology from Netherlands company ASML for installation in Israel.

US-China standoff delaying completion of Tower deal

In another two weeks, it will be a year since Intel signed the deal to buy Israeli-US chip manufacturer Tower Semiconductor. The much publicized acquisition became a central plank of Intel Corporation CEO Pat Gelsinger’s strategy of turning Intel into a service provider, making chips to order according to other companies’ designs.

Intel promised to obtain the required regulatory consents to the deal by February 15 this year, but it now looks as though completion of the deal might be postponed to as late as June, because of delay by the Chinese regulator.

Closure of the deal comes at a sensitive time in US-Chinese relations. The US has declared a ban on the export of manufacturing plant for advanced microchips to China, and has co-opted the Netherlands and Japan, which are critical to China’s manufacturing value chain, to the ban.

The Chinese state and Intel are bound up with each other, and it is not certain that the Chinese regulator will want to express a protest against the US government by nixing Intel’s deal. The market, however, is already reflecting lack of confidence that the deal will be closed. Tower Semiconductor’s shares are at $42, lower than the $53 price in the deal with Intel.

"The price indicates that the market believes that there is a high chance that the deal will not take place, or at least that completion will be significantly postponed," says Carmi. "In the extreme case in which the deal is cancelled, the share price could fall substantially, like those of its competitors, which are down about 30% on average."

Published by Globes, Israel business news - en.globes.co.il - on January 30, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Pat Gelsinger  credit: Intel
Pat Gelsinger credit: Intel
Fazal Merchant credit: Sara Vaz Wiz appoints CFO with IPO on the horizon

The Israeli cybersecurity company says Fazal Merchant will "ensure IPO readiness."

Minister of Justice Yariv Levin and Minister of Foreign Affairs Gideon Sa'ar   credit:  Michael Dimenstein, Government Press Office Levin, Sa'ar present judicial overhaul compromise

The plan makes only a minor change to the composition of the Judicial Selection Committee, and covers the scope of basic laws and judicial review of legislation.

Elad Systems CEO Dagan Halevy credit: PR Elad Software Systems files for TASE IPO

The IT services company is seeking to raise NIS 120 million.

Elbit Systems credit: PR Elbit wins $60m European counter drone deal

The ReDrone modular, multi-sensor, and multi-mission system is part of Elbit’s advanced EW, Radars, and SIGINT portfolio.

EndoStream founders Alon May and Danel Mayer credit: Elad Naftali Japan's Kaneka buys Israeli co EndoStream Medical

The Or Akiva-based medical device company is developing the Nautilus device for aneurysm treatment.

Avigdor Willenz credit: Intel Israeli AI-chip co Element Labs aims to rival tech giants

Billionaire Avigdor Willenz's latest startup has adopted a strategy that has put it on a path to rival chip giants like Broadcom, Marvell and indirectly Nvidia.

Israeli passport  credit: Shutterstock Israel rises in world passport strength rankings

Israel's passport has risen from 24th place in recent years following the Abraham Accords, and the US decision to allow Israel to join the visa waiver program, Henley and Partners reports.

El Al plane credit: Shutterstock El Al adds flights to European cities after Moscow suspension

El Al has increased its number of weekly flights: to Paris from 23 to 25; to Vienna from five to six; to Frankfurt from six to eight; to Zurich from seven to nine; and to Munich from five to six.

Richard Francis and Avishai Abrahami credit: Elad Malkah and Alan Tzatzkin US analysts list Teva, Wix in 2025 top picks

Bank of America has raised Teva's price target to $26 per share and Cantor Fitzgerald has raised Wix's price target to $260 per share.

Road accident in Israel  credit: Shutterstock Minister rejects abolition of commuting injury benefit

Minister of Labor Yoav Ben–Tzur declares that will not adopt the inter-ministerial committee's recommendation to end recognition of accidents to and from work as work accidents.

Shekels credit: Shutterstock Vladerina32 Shekel weakens sharply against US dollar

The dollar is strengthening worldwide after reports in the US that President elect Donald Trump will declare a national economic emergency to provide legal justification for his new tariff program.

Haredi men at IDF recruitment center  credit: IDF Spokesperson Haredi recruitment to IDF down 36% in a decade

According to the Israel Democracy Institute, the number of haredi yeshiva students rose 86% in the same period, while the number studying for a first degree doubled.

Bus lane on coastal highway credit: Shlomi Yosef Paving new bus lanes slows to a crawl

Over the past two years the Transport Ministry has fallen far short in meeting targets for new bus lanes and reducing road accident deaths.

Amir Shaltiel  credit: Eyal Izhar Allied Group to pay Amir Shaltiel NIS 200m for Metropolis stake

Metropolis carries out urban renewal projects in central Israel. The deal values it at NIS 800 million.

Road accident in Israel  credit: Shutterstock Abolish benefits for injuries on way to work, c'ttee says

An inter-ministerial committee recommends that accidents on the way to and from work should no longer be recognized as work accidents.

Innoviz founders Credit: David Garb - Innoviz Spokesperson Innoviz teams with Nvidia on perception software

Innoviz says that the collaboration represents a major leap forward in the car industry's transition to AI-based systems and higher performance.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018