Intel invests $2.7 billion in its Israeli chip facility

In an unstable business environment, where US companies are scaling back and weathering bad times, Intel has made a surprising business move. The chipmaker announced in January that it will invest $2.7 billion in its Israeli plant in southern Israel, which will produce next-generation 22-nanometer chips.

It is expected that 22-nanometer technology will make our computers faster, smaller and lighter.

Not willing to elaborate on what exactly this will mean for our everyday lives, Intel Israel’s spokesman Koby Bahar tells ISRAEL21c that “it will be the most advanced technology” available.

The investment is earmarked for upgrading the technology, and not for enlarging the existing fabrication plant, he stresses.

Bahar notes that Intel has also made new investments in the United States and has spent $500 million to re-open a facility in Ireland. Adding Israel to its investment plans just makes business sense.

“Intel decided to invest here because it’s worthwhile,” he says. “Because we have a good record for Israel and Intel.”

US tech trends business magazine Fast Company provides another angle on this development: “The move reduces Intel’s exposure to the vagaries of Far East economies and risk of earthquake interference with production.”

The total amount includes $210 million from the Israeli government. Over the 25 years that Intel has been manufacturing chips in Israel, it has earned $1.2 billion in grants from the Israeli government.

Relying on Israel’s skilled workforce

Currently, Intel produces processors that run more than 80 percent of the world’s personal computers. If you own a PC, chances are a part of it was produced in or developed in Israel.

The core business in Israel is processors that run the central processing units (CPUs) in PCs. “Dealing with advanced technology, we have to hire skilled people. People working here have very high skill sets, education and experience,” says Bahar.

Intel Israel’s “green” Development Center in Haifa.

The employees at Intel Israel, under the supervision of general manager Maxine Fassberg, were reportedly very happy about the news. A strong year for Intel bodes well for them too, with each of the 7,057 employees earning a bonus of 3.2 months’ salary for their work in 2010 – a year in which Intel’s fourth-quarter earnings grew by eight percent from the previous year to $11.5 billion, and net profit grew by 167% to $11.7 billion.

According to news reports, each employee will earn at least a $10,000 bonus, on top of a pay raise. In more good news, Intel Israel expects to hire an additional 1,000 employees over the next year.

Starting Feb 28, the company will move from 45-nanometer to 22-nanometer chips. Fassberg said the Kiryat Gat plant is the second Intel facility in the world to produce these tiny chips.

Powering the next-generation

In other Intel Israel news, the latest “Sandy Bridge” microarchitecture for next-generation PCs, developed at the Haifa R&D center, has drawn a great deal of attention. Sandy Bridge, unveiled at the recent Consumer Electronics Show in Las Vegas following four years of development work by 1,000 engineers, will also help Intel PCs and laptops compete with tablets.

Meanwhile, tech geeks are waiting to see what Intel Israel’s new Netbook processor, the Cedarview, will be like. Developed at Intel Israel’s Jerusalem center, this is expected to lead the next generation of Intel’s Atom processor.

Intel Israel is also working on Light Peak, which will enable a high-speed data transfer rate of 10-gigahertz between computer and screen or between computer and storage device over a single wire. The end result? Thinner computers with fewer connections.

Intel Israel, operating since 1974, was the company’s first development center outside the United States. It has facilities based in Haifa, Jerusalem, Kiryat Gat, Yakum and Petach Tikva.