Intel Corporation (NASDAQ:INTC) will invest around $6 billion in upgrading its Israeli production plant, according to Israeli Economy Minister Naftali Bennett. Around 20 billion shekels will be invested in Israel, which is one of the biggest investments in the country’s history, and the plant will be the most advanced in the world, according to the minister. There was no public confirmation by Intel.
“Intel chose to set up its most advanced production line in Israel in the face of tough competition,” Bennett told public radio, adding, “It’s an investment of billions of shekels… in Israeli hi-tech.”
Intel investment to create thousands of jobs
Finance Minister Yair Lapid, on his Facebook page, said that such a huge investment reflects the confidence in the Israeli economy and the expertise found there. Also about thousands of new jobs would be created directly, and tens of thousands indirectly.
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Intel Corporation (NASDAQ:INTC) opened its Israel Development center in 1974 in the northern port city of Haifa. It was the first design and development center outside the United States. The chip maker’s other facilities are in the central town of Petah Tikvah and in Yakum, north of Tel Aviv. There is also a large manufacturing plant in Kiryat Gat in the south. The chip maker’s website says it currently has 9,885 employees in Israel.
Bennett said that Intel Corporation (NASDAQ:INTC) has given the country the best gift on the 66th anniversary of its Independence Day. He said that the chipmaker will submit its formal application to the economy ministry’s capital investment center. The application will be forwarded for signing “in the near future.”
Israel offering tax incentives
Israel offers tax incentives to big companies to invest in the country, and this has become a point of controversy among political leaders. As a result, some of the biggest companies in the world are operating in Israel and are paying very low taxes. For instance, in 2010 the government paid out NIS 5.6 billion in tax credits for capital investments, and 70% of this tax credit went to four companies: Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Check Point Software Technologies, Israel Chemicals and Intel Corporation (NASDAQ:INTC). All four companies paid an average tax of 3%, compared to the corporate rate tax of 25%.