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.
Ireland would be better for them long term IMO OC
"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."
however, if they are going to build new for the next 10 year cycle+, then they may be even better placed to also seriously consider also moving mass production and infrastructure to mainland Britain,to the "north west" greater Manchester UK, and surrounding areas where the original world industrial revolution took place and begin a new valley revolution major hub there.
the new Uk con/lib Gov and global financial institutions located there are probably in a far better position to help find the financial tax incentives and other help etc given the right push.
i cant help but think its far better the latest brain drain and mass investments in the future be US-UK centred rather than elusively one way to the far east, but time will tell.
I cannot understand why would Intel build a state-of-the-art Fab in Israel? That part of the world is very unstable. Ireland or indeed the UK (given Ireland's Euro uncertainties) would be much better choice.
As an Israeli, I take umbrage at that. Israel is not at all unstable. have you ever been? In fact, it's the tech haven of the middle east with some of the world's brightest engineers. The Technion, known to be one of the best engineering universities in the world (and sistered with MIT) is in Haifa and has produced some of the best tech execs today. Also, Israel's GDP growth is astounding, our currency is far more stable than Europe's (or the US' for that matter), and our workforce is skilled, and cheap. So.... what was your objection again?
I think both of you are looking at the same coin, but from two different sides. Yes, internally Israel is quite stable. The technology sector in particular is THRIVING and is amazing given the country's size. Technion is by all accounts a top-notch institution in some disciplines. However, all it takes to ruin this stability is one serious rift with Iran, or Egypt deciding that it does not want to play nice with Israel any more (not in terms of war, but in terms of economic cooperation and simply allowing goods to flow in/out of Israel). Let's say that Israel decides to bomb Iran's nuclear facilities. WWID (What Would Iran Do?). Probably lob a conventional missile back. Where do you lob it to cause maximum damage? Not Jerusalem, but how about a technology center. Yes, Israel is relatively stable relatively democratic thriving economy TODAY. The problem is that noone really knows that this will be the case 5-10 years from now. Nobody is going to lob a missile at Ireland 10 years from now. And with the depressed economy there is a lot of leverage.
As to why Intel builds fabs in Israel... think about Andy Grove's ethnicity. This was probably a personal thing for him that also kind of made sense.
Terror can strike anywhere... Even in the US. Or India. Or Indonesia. Then there are places where natural disasters are a concern... like Japan, or Thailand.... No where is "safe" if you look at all the risks... but Intel has suffered no disruption in Israel since it started operating there. Not natural or otherwise...
that's my point. I get fed up of people being hysterical about life in Israel. I lived there most of my life, and I'm perfectly ok... no trauma! :)
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.
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.
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.
I believe there are many factors Intel looks at when deciding where to locate a wafer fab - besides just basic monetary concerns. The influence of each of the many variables considered probably changes rapidly over time. I for one would not be surprised at just about any location Intel might choose. But also, looking back over the years, there are a few locations that were "chosen" by Intel at one point in time, but were never actually built on.
well.. why not... they have a very good experience in israel.,., those guys meet all the expectations from them , brign LOT of added value in creativity, commitments, innovations and did DELIVER ... right ?
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.
As the article says, Intel has been in Israel since '64 and they have a solid source of engineering talent there to run the factories. Most of Intel's fabs are already in the US -- Oregon, Arizona, New Mexico. And they're building 2 new fabs here right now.
Sylvie, I understand the need to defend the homeland against unfounded generalizations (e.g., Israel being a war zone), but let's not kid ourselves. No diplomatic relations with Syria for decades and no official end the the Six Day War. The Golan Heights? Plus, categorizing the situation in Gaza as anything but a constant state of war is avoiding an inconvenient truth. The distance from Gallilee to he Golan Heights is less than most Americans drive to work one way, so defending Gallilee unconditionally does not stand up to logical analysis. Yes, Israel proper is not a war zone in the strict sense of the word. But it is pretty damn close to a war zone in the strict sense of the word.
well, I certainly wouldn't recommend building a fab in Gaza! But that's Palestine... not Israel :)
And while it's true that there was no official end to the 6 day war, and no peace with Syria, it's still, ironically, our quietest front!
I am just speculating, as I have no "inside" information, but Intel has had a presence in Israel for many years. Top Intel executives Mooly Eden and Dadi Perlmutter among others are from Israel. So it's not too hard to imagine that their past experience and an internal Israel lobby might influence their decision. A company as large as Intel needs diverse manufacturing locations for many reasons - from geopolitical to general risk mitigation.
Hardly. Israel has been important to Intel for a long time and both Dadi and Mooly are products of Intel Israel (and the Technion) rather than drivers of it. And do you really think Intel makes multi billion dollar decisions based on the whims of its Israeli execs? you don't give Intel much credit, do you??
Very valid point. The Israeli design center saved Intel's bacon during he P4 fiasco and has been an essential component in Intel's design efforts ever since. However, that is quite separate and orthogonal to the fab side.
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.
Why build it in Israel, Ireland, or the UK?
Why not here in the US? US economy is in desperate need of job creation. Israeli or Irish wages aren't that far off from US wages, so the cheap-labor excuse cannot be invoqued Here.
Intel, a US company, should build its cutting-edge Fab right here in the US.
Intel is already building new multi-billion plants in Oregon, Arizona and New Mexico. Haven't you been paying attention ? Most of their fabs are here. They have more employees in Oregon (18,000) then anywhere else in the world. But they're a global corporation with most of their sales now outside of the US. One of the things Intel has been concerned about is a shortage of engineers in the US. You need a lot to run high tech factories. Israel has a good source as well.
Humm! Intel really has great influence on the world economy! Wherever Intel puts its money in, the economy and long term development of that place will be affected much. It then seems to be a political decision rather than a solely monetary one.
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.
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.
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..
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.
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.
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