Intel to Invest $5 Billion to Expand Its Israel Operations

(Bloomberg) -- Intel Corp. plans to boost spending in Israel, one year after pulling off the largest takeover in the country's history.

The American chipmaker will invest about 18 billion shekels ($5 billion) through 2020 to upgrade its manufacturing plant in Kiryat Gat, according to an emailed statement Tuesday from Israel's Finance Ministry. Intel will buy local companies for 3 billion shekels, employing an additional 250 people in the process, the statement said.

In return for the investment, the government plans to extend tax breaks to Intel until 2027, and issue a 700-million-shekel grant for future purchases of local technologies. Approval for these benefits is in the final stages, the statement said.

“There's no doubt” that Intel's investment will have a positive effect on Israel's economy, especially for companies providing services to the manufacturing plant, said Shmuel Ben Arie, head of investments for Israel at Pioneer Wealth Management Ltd. Exporters could suffer, however, as such a massive flow of money could strengthen the shekel, Israel's currency, he said.

Intel made a splash last year with its $15 billion purchase of Israel's Mobileye NV, a record deal aimed at helping the tech giant leapfrog competitors in the autonomous-driving industry. The company has a long history with Israel, beginning local operations in 1974, and is today one of the largest employers in the country. Israel is a key contributor to Intel's evolving know-how, with $6.5 billion worth of property, plant and equipment there, second only to the U.S.

An Intel spokeswoman said the company has submitted a plan to upgrade the Kiryat Gat facility “to meet future needs.” No details of the project -- including schedules, costs and technologies -- are being disclosed for now, she said.

--With assistance from Nate Lanxon

To contact the reporter on this story: Yaacov Benmeleh in Tel Aviv at ybenmeleh@bloomberg.net.

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Michael S. Arnold

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