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December 1, 2005 8:11 pm

Intel to build $3.5bn Israel plant

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Intel is to build a $3.5bn computer chip plant in Israel after being lured by a government grant of $525m and tax incentives on an existing plant, consolidating its 30-year presence in the country.

The US chipmaker will make 300mm wafers for personal computers using 45 nanometre process technology, which allows chip circuitry to be built at half the standard 90 nanometres, at the new plant in Kiryat Gat in southern Israel.

“At over $3.5bn, this will be our largest investment in Israel and one of our largest anywhere in the world,” said Tom Franz, an Intel manufacturing general manager. He said Intel chose Israel because of its established presence there and the government’s financial assistance.

Intel’s exports from Israel were worth $1.14bn last year and accounted for 9 per cent of Israel’s total electronics and information technology exports. Its processors power an estimated 80 per cent of the world’s personal computers.

The new plant is expected to create around 2,000 jobs in Kiryat Gat, where 3,500 people are already employed. A study for Israel’s Ministry of Industry, Trade and Labour earlier this year said the new project would contribute a net $450m to the economy.

Intel’s first 45 nanometre plant is being built in Arizona and is expected to become operational in late 2007 while the Israeli plant should start production in 2008 and export $3bn a year when it reaches full capacity, expected up to two years after it opens.

Meanwhile, Hewlett-Packard was considering an investment worth up to $60m either in Israel, Singapore or China, the Israeli Globes web site reported this week. The company was waiting to see if the Israeli government would exempt it from taxes on dividends as part of new law to encourage capital investments, Globes said.

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