”At this stage, we know of no future changes in our investment and setting up of fabs. Where Israel is concerned, Intel International has not decided if and when the fab will be set up,” the Intel spokesman today told “Globes. He was responding to analysts’ assessments that the company would reduce its spending for setting up new fabs by 38% in 2001 to $4 billion, instead of $6.5 billion.
According to the forecast by Prudential Securities, Intel will lower its capital investments next year, in view of weaker demand for PCs, which will also reduce the demand for chips. Another assessment is that the financial situation of Intel, which issued a profit warning at the beginning of the month, will cause the establishment of new fabs to be postponed. Intel explained the profit warning by the expected slowdown in the PC market.
These assessments are consistent with Intel’s announcement yesterday that it is postponing the founding of a new fab in Ireland, so that production in the fab will commence in the second half of 2002.
At the same time, Israel Investment Promotion Center director Haviva Cohen told “Globes” that talks with Intel were continuing concerning investment in Intel’s proposed fab in Israel. She estimates that the negotiation will be completed within a few weeks.
Intel is examining the possibility of setting up another fab in Kiryat Gat, adjacent to the existing fab, at an investment of $2.2-3.5 billion. Intel is asking for $440-700 million in State assistance in setting up the fab. In the context of the negotiations, the possibility of dividing the aid, with part being given in the form of tax breaks over a number of years, is being considered.
In response, the Intel spokesman said that Intel has not officially announced its intention to cut its capital investment next year and has not yet decided if and when to set up a fab in Israel.
Published by Israel's Business Arena on December 14, 2000