Intel to Receive NIS 700 Million Government Grant to Expand Israeli Fab

The Israeli parliamentary finance committee has approved on Monday a NIS 700 million ($185.5 million) grant to Intel, to fund company's planned expansion of one of its local plants. Located in Kiryat Gat, a small town in Israel's south, Fab 28 manufactures chips for servers, workstations, mobile computers, and desktops. Intel announced its intention to expand the facility with a NIS 17 billion investment in May when it submitted the plan for government approval.

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Awarded as part of changes approved to the Israeli national budget for 2018, the grant is conditioned on Intel's previously announced investment, on the company’s commitment to hire 250 new employees, and on annual deals worth NIS 2.1 billion (around $560 million) the company agreed to ink with local vendors and retailers.

Last week, Intel announced it intends to expand its manufacturing capabilities in Israel, Ireland, and Oregon. The company stated it expects to start the multi-year construction in 2019. The company is expected to apply for further government grants in Israel for the years 2019 and 2020.

In 2014, Intel announced a NIS 23.5 billion investment in the Kiryat Gat facility, for which it received a NIS 1.7 billion grant. Following the investment, Intel was recognized by the Israeli government as a strategic company, landing the company a reduced corporate tax rate of 5%, instead of the country’s standard 23%.