LONDON – Intel Corp. has chosen its Irish Leixlip campus, rather than Fab 28 at Kiryat Gat in Israel, as the location to receive an upgrade to 15-nm production technology, according to a report in Globes, which referenced unnamed sources.
The selection of Ireland over Israel was, apparently a reaction to the Israel government's offer to Intel of up to 1 billion shekels (about $290 million) to expand manufacturing operations in the country. Intel had asked for about $600 million the report said.
The Israeli government's counter offer was tied to job creation at two sites, Fab 28 at Kiryat Gat and a chip assembly unit to be located in the north of the country with a proposed site at Beit She'an. Intel has been underwhelmed by the offer and unhappy about plans that Israel would make inward investors compete to receive money from a fixed fund.
As a result Intel has decided to invest in its facilities in Ireland, the report said quoting an unnamed Israeli government official. "Intel will only officially announce its decision at the end of the year, but we understand from the spirit of the talks that it's going to Ireland," the report quoted him saying. However, Intel is still interested in receiving support in return for creating a chip assembly operation at Beit She'an, the report added.
Intel closed down its Fab 14 in Leixlip near Dublin in the summer of 2009 reducing the number of fabs it operates on the campus to three, labeled Fabs 10, 24 and 24-2. In January 2011 Intel committed to spend about $500 million rebuilding the shell and infrastructure of the old Fab 14 building, but without saying what plans it had for manufacturing process technologies in the reconditioned shell. It is not known whether will stick with calling the building Fab 14 or rename it.
There was a story on job creation as a bargaining chip on PBS radio recently. They concentrated on the Ford labor negotiations, but the larger point was that companies have all the leverage in those discussions. Globalization has handed them the keys to a disconcerting amount of power over governments.
I think Intel was asking Israel for $600 million towards an estimated total cost of $2.7 billion for a second fab module at Kiryat Gat. That is about 22 percent which is about the normal amount of incentive.
But Israel offered $290 million of which only half was for Kiryat Gat and the rest was for a chip assembly plant in the north of the country.