High-tech sources today predicted that the large-scale layoffs at global company Intel would also affect its Israeli branch, although to a lesser extent than at the company's other sites around the world. Some of the sources estimated that hundreds of the company's 12,000 employees in Israel would be laid off as part of the global company's cutbacks.
Managed by CEO Maxine Fassberg, Intel Israel responded laconically to the global company's plan to fire 11% of its 107,000 worldwide staff, saying, "The measure is a global one, and we are studying its effect on activity in Israel."
The company headquarters in Israel said, "One thing is certain: Intel will fulfill its commitments to the Israeli government."
Intel made these commitments to the Ministries of Finance and Economy and Industry two years ago, when it received a NIS 1.1 billion grant from the Ministry of Economy and Industry Investment Promotion Center to develop its production activity in Kiryat Gat. The benefits granted to Intel by the state also included a reduction of corporate taxation to 5%.
Under those agreements, Intel is investing over $6 billion in a new production center in the Kiryat Gat industrial zone, and work on the center is in the final stages. When completed, staff employed at the production site in Kiryat Gat will be increased by 1,000 to 4,000.
3,000 of Intel's 10,000 workers in Israel are currently employed at the Kiryat Gat site. Intel also has development centers in Haifa, Jerusalem, Yakum, and Petah Tikva. The new Kiryat Gat fab is slated to open in 2017, and in addition to the layoffs planned by company headquarters in the US, Intel Israel is expected to continue hiring workers for the expansion of its production facility in the south.
Intel said that half of its workers in Kiryat Gat were residents of southern Israel. High-tech sources today said that Intel's commitment to the state applied to its activity in Kiryat Gat, and this activity would not be affected in any case, because when the upgrading of the fab is completed, it would be the company's most advanced facility in the world.
"I'm not worried," Israel Association of Electronics and Software Industries chairman and former Motorola Israel president Elisha Yanay told "Globes." "Intel Israel's business features many development centers regarded by the global company as its growth engines. This involves the Internet of Things, cognitive computing, the smart home, cloud computing services, and other areas. Intel will not want to harm what it regards as growth engines, and it is a serious enough company to make the right decisions in this matter."
Yanay believes that the layoffs expected at Intel Israel as part of the worldwide layoffs planned by the company will be on a small scale. "Intel Israel's position is solid, compared with the company's business in other places around the world, and it does not seem to me that they will make major cuts here. It is possible that they will decide to merge one of the development centers in order to save on operating costs, or will offer employees voluntary retirement. Those leaving the company will have no problem getting jobs with one of the startups."
Commenting on the measure planned by the global company and past commitments made by Intel to the government, the Ministry of Economy and Industry today said, "Intel has an obligation to fulfill the terms of the agreement it undertook - including its employment aspects. The director of the Investment Promotion Center is assessing the fulfillment of these conditions according to the plan, and as far as the Ministry of Economy and Industry knows, there is no intention of firing workers at Kiryat Gat."
At the same time, other sources involved in the subject predicted that the company would fire workers in Israel employed at its other centers in Israel. Intel expanded its activity at some of its development centers in Israel last year, recruiting 400 new employees. Intel Israel's exports totaled $4.1 billion in 2015, constituting 11% of all Israeli high-tech exports. Intel has operated in Israel since 1974, and company figures show that Intel Israel's exports since that time have amounted to $43 billion, including $29 billion in the past decade.
Published by Globes [online], Israel business news - www.globes-online.com - on April 20, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016