from the March 2010 issue

Israel-Intel Love Affair

Intel Corp's Israeli subsidiary said that its exports surged 145 percent in 2009 to a record $3.4 billion and the company is hoping growth will continue with further expansion in the country.

Exports rose thanks to Intel's new $3.5 billion chip manufacturing plant in southern Israel which came into full production in early 2009.

It is the third plant in the world to make processors with 45 nanometer-wide circuitry and Intel is negotiating with the Israeli government for a possible grant to expand the plant to include production of smaller 22-nanometre chips.

"We are competing with other countries on the ability to bring to Israel 22-nanometre technology," Intel Israel General Manager Maxine Fassberg said, adding that the company plans to have two 22-nanometre plants. The first one will be built in Arizona and Fassberg said she'd like the second plant to be in Israel.

The investment to expand the Israeli plant is estimated at $2.7 billion, she said. "We have asked for a decision (from Israel) by mid-March when Intel is due to make a decision," Fassberg said. "Intel's second 22 nanometer plant needs to start producing by the start of 2012." Fassberg declined to give an outlook for 2010. Intel is the largest private exporter in Israel as well as the largest employer in the private sector with 6,340 workers at its two plants and four research and development centers. A hiring freeze at Intel in Israel was lifted at the beginning of the year when more than 120 workers were recruited. In 2009 the company converted its former Fab 8 plant in Jerusalem into a $40 million die preparation plant which opened in November and will also contribute to exports.

Intel accounts for 10 percent of Israel's industrial exports and $7.3 billion has been invested in its operations in Israel, including $1.2 billion in grants from the government, Fassberg said in Fab 28. Intel Israel has 6,300 employees altogether at its fabs in Kiryat Gat and Jerusalem and at its R&D centers in Haifa, Petah Tikva, and Yakum.

The company estimates that an additional 20,000 jobs are directly and indirectly related to its activity in Israel.

Intel made $392 million in reciprocal procurements from Israeli companies in 2009, including $103 million for the automation of production lines at its fabs.

Intel Israel bought metrology equipment to diagnose flaws in the production process from Applied Materials Israel Ltd. and Jordan Valley Semiconductors Ltd., in which Intel invested $11 million in 2008.

Reprinted from the Israel High-Tech & Investment Report March 2010

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