MOUNTAIN VIEW, Calif.--The Israeli government is attempting to force Intel Corp.’s hand on a decision to potentially build a new fab in the north of the country in exchange for a 1 billion shekel ($264.37 million) grant, according to media reports.
Intel has been putting off the decision of where to build its new fab, and reports in the Israeli media say the country’s Ministry of Finance and Ministry of Industry, Trade and Labor are losing patience with the chip maker.
Israel has now given Intel until early March to make its decision, in an ultimatum that would see the loan expire and the money used as a grant to another multinational, should Intel fail to respond within the timeframe.
Intel had asked for a $600 million grant from the Israeli government back in mid-2011, pointing to the firm’s already large $5 billion investment to upgrade its Kiryat Gat fab, a facility regarded as the most advanced chip manufacturing plant in the world.
Israel, however, only agreed to $264 million, with the condition Intel set up a new fab and assembly plant in the Galilee, specifically, Beit She'an. Building a fab in the area would create hundreds of local jobs in an area which has seen relatively little tech development to date.
Intel –which has been operating in Israel since 1964-- is said to be considering its options, with some rumblings that the firm could choose to plow its multibillion dollar investment into Ireland instead. The firm has also said it will not make a decision until the second quarter of 2012.
Absolutely. What I can't understand is how come the US is disadvantaged when it comes to the talent pipeline as some posts above imply? The same applies to the UK/Ireland, home to some of the world's top Universities with a large supply of top-notch graduates.
I would think the US is the safest and most stable place to locate all of Intel's fabs. It is the home of the company, R&D headquarters, and the home base of many major suppliers: Applied Materials, Lam Research, KLA, Novellus.
The "close to customers" argument is disingenuous at best. If China can ship large steel girders to California to upgrade the Bay Bridge, I am sure Intel can affordably ship its (much much smaller) products all over the world.
Well. intel does not consider the Israel Galil for no reason,,, it is less than one hour from the Technion (which lately brought 2 more NOVEL prices.,. and few more on the way).,it is less thna one hour form new rising technical university in the City of Carmeil, which can supply any amount of EE, SW and Practical engineers require to build up a fast ramp-up, beside.. it is far enough from the SEA against Water overflow.. and from the EARTH-CRECKS .. not to mention .. that what ever Ee/SW/DE we shall not get to intel.. APPLE will take into their new site in Haifa and further compete-challange intel..
Here are a few major issues at various sites worldwide:
All of Europe: economic and potentially political instability
China: IP protection and political issues
Thailand, Japan...hell pretty much anywhere: natural disaster.
US: high cost, talent availability, distance from customers and other plants.
EMCgenius--you are right, I believe it was 1974.
Because of political and intellectual property issues, no major US company will move its most sensitive, most advanced technology to China. Just ain't happening.
I live in Israel now, and understand the concerns. However, as Sylvie said, Intel has to account for many different issues anywhere in the world. Political stability; economic crisis; natural disaster; war. It also has to account for all the basics: infrastructure; financial support; talent pipeline.
No site is entirely safe from every perspective. However, Israel has consistently developed its tech manufacturing industry over the past 40 years, with no disruption from the various waves of violence. Intel has had major fabs in Israel since 1999 and had a smaller fab decades before that.
Would you want to be investing many billions of dollars in a European country with no idea what will happen with its currency or economic stability? An economic crash combined with the demographic clashes may very well lead to major upheavals. You might even call it a political powder keg.
Point is, you are right that Israel brings some risk. But so does every potential site. That is why Intel spreads its fabs all over the world, in sites where it can find the best mix of things it is looking for. Israel unquestionably offers the infrastructure, talent, government support, semiconductor ecosystem, and economic stability. The prospect of violence is one factor in that equation.
Yes indeed, KB, enemies in every direction, and as for the economic strength of Ireland, I suspect it would be far stronger, if, like Israel, it too had 3 billion US$, tax free, delivered yearly, and 30 billion US$ in defense 'deals'. The economics of free money are very compelling.
When was the last time you've tried to get to the US and pass the sucurity checks at the airport? taking off your shoes, belt, physical checks etc. So security is NOT something typical just for those travelling to Israel.
I agree. If it were a design centre, I would say it makes perfect sense. As Sylvie said above, Israeli colleges are on a par with the best in the world and it makes prefect sense to tap into that talent, but to commit to building a multi-billion dollar fab within the range of the likes of Hezbollah's rockets does not make sense to me.
The Middle East is constantly on a powder keg. Why would Intel commit billions of dollars to that region while it can perfectly do it somewhere else? Somewhere that is much more stable, with access to a larger pool of talent, and perhaps even more Government help? As I said above, Ireland or the UK make a better choice to me.
No, I have never been to Israel, but let's not kid ourselves, it is a country surrounded by enemies, and while the situation is stable right now, it could turn nasty at any moment. I sympathise with your enthusiasm towards your country of origin but to me, as an outsider, looking at El Al's check-in desks at some European airports alone does not really give much of a confidence to visit the country let alone commit large sums of money to it! The check-in desks are indeed often guarded by special security forces unlike many other airlines.
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