Intel Corp. reportedly plans to build another manufacturing facility adjacent to the current Fab 18 in the southern Israeli city of Kiryat Gat. The world’s largest maker of chips is currently negotiating with the Israeli government for incentives. The government is also asking Intel to further boost its presence in the country by building another fab in the northern part of Israel.

“Intel has a bargaining position in deciding where its plants will be, and Intel expects certain concessions or support from the government. But there are other considerations as well, such as the quality of the work force and transportation. What the government is considering are the effects of having a new plant in Kiryat Gat and what impact it will have on the regional development and the national development,” said Moshe Justman, dean of the faculty of humanities and social sciences at Ben-Gurion University, in an interview with The Media Line web-site.

The total cost of the fab that Intel plans to establish next to its Fab 18 is expected to amount $2.7 billion. It is estimated that the plant will provide 400 direct jobs. The company hopes to obtain $400 million in incentives from the government, but the ministry of industry, trade and labor is reportedly offering only $200-250 million. The government is reportedly only willing to provide the incentive package demanded by Intel if the latter agrees to construct another fab in the northern part of the country. It remains to be seen whether Intel agrees to build another plant or Israel agrees to provide the requested support without demanding to establish third facility in the country.

 “Israel does depend on Intel and Intel depends on Israel; there are advantages for both parties. The stronger the Israeli economy and hi-tech industries become, then the position for the government is stronger; but on the other hand there is only one Intel. There is a long stand relationship between the two with mutual befits and Intel going to continue to have a presence in Israel for a long time,” said Mr. Justman.

Intel's fab 18 in Qiryat Gat opened in 1999 and now employs more than 2000 people. In addition, Intel has operations in Haifa, Jerusalem, Petach Tikva and Yakum.

Tags: Intel, Semiconductor, Business