Intel to add chip plant in Israel

FIRST FROM SCRATCH SINCE EARLY ’90S

JERUSALEM — Santa Clara chip maker Intel said Thursday that it would build a $3.5 billion plant in southern Israel alongside an existing one, and the Israeli government said the project would create 4,400 jobs in a region hard hit by unemployment.

Israel wooed the company with a $525 million grant, noting that the project represents the biggest investment ever in Israel by an industrial corporation.

The factory, or ‘‘fab’’ in semiconductor industry parlance, is the company’s first to be built from scratch since the early 1990s, said Intel spokesman Chuck Mulloy. Since then, it has spent billions of dollars to upgrade existing plants around the world, he added.

Grant ‘was a help’

‘‘We considered all of our sites, but this was the best solution,’’ he said. ‘‘The $525 million grant from Israel certainly was a help.’’

The new factory will produce microprocessors and is expected to be operational in the second half of 2008, Intel said, adding that construction would begin immediately.

Israel’s Trade and Industry ministry said in a statement that the new plant, in the town of Kiryat Gat, and Intel’s plans to upgrade its existing facility there would create work for 4,400 people, in addition to the 3,500 already employed by Intel in the town.

Intel set up its first development center outside the United States in the northern Israeli city of Haifa in 1974. It also has manufacturing, research and sales facilities in Jerusalem, and in central and northern Israel, employing a total of 5,400 people at six locations.

Kiryat Gat is in the southern Negev desert region, where development towns built around textile factories are reeling as factories close because of high labor costs.

Peak in 2000

Israeli business daily Globes reported Thursday that the number of high-tech jobs in the country rose to 57,000 last year, up from around 53,000 over the years 2001-2003 but still short of a peak of 66,300 in the year 2000.

Israel’s high-tech industry accounts for roughly half of the nation’s exports and is considered a world leader in areas like communications, computer security and chip technology. Much of the workforce has been trained in secretive army units or prestigious university programs.

Israel has produced such industry leaders as computersecurity giant Check Point Software Technologies and business-software maker Amdocs. Other large technology companies, including Microsoft and Motorola, also have sizable Israeli operations.

The new Kiryat Gat plant will produce 300-millimeter (12-inch) chip wafers, which cut the cost of manufacturing semiconductors, the Intel statement said.

The company currently produces those wafers at plants in Oregon, Arizona, New Mexico and Ireland.