Israel yesterday approved a grant of $525 million (€449 million) to help fund expansion plans by Intel, which voiced optimism that it would win final approval for a new investment soon.
The world's biggest computer chipmaker is expected to invest a total of $5 billion to build a new plant and upgrade an existing facility in Israel, that country's ministry for industry, trade and labour said in a statement. The investment marks the largest ever by an industrial company in Israel, the ministry added.
Earlier this year, the Government withdrew €170 million in aid granted by IDA Ireland to Intel following indications that it was about to be blocked by the European Commission.
The EU position that the Irish grant aid for the Fab 24-2 project represented illegal state aid created a rift with the Government.
Israel, which competes with the Republic and the US for Intel investment, is not subject to the sort of scrutiny exercised by the European Commission in the Irish case.
The Israeli grant represents 12.5 per cent of the new plant's cost, which is expected to be $4.4 billion over four years. A company spokesman at Intel headquarters in Santa Clara, California, said the grant still had a few more steps to go through, such as winning approval from the finance committee in the Knesset, Israel's parliament.
"This is encouraging, but any other comment would be inappropriate," spokesman Chuck Mulloy said. "We should know something in a few weeks, maybe less, depending on how that process goes over there."
A study commissioned by the Israeli ministry found that the project would contribute a net $450 million to Israel's economy.
Intel was expected to hire 4,400 new workers for the new Fab 28 plant in the southern Israeli town of Kiryat Gat, the site of an existing chip plant that employs about 3,500 people, the ministry said.
In July, Prime Minister Ariel Sharon said Intel had informed him that it planned to build another plant in Israel, but Intel has yet to officially confirm its plans.
The Republic's ability to offer grants to attract investment from multinationals in the face of strong competition from countries such as Israel was underlined last week by news that the EU Commission is close to blocking a €50 million grant package for a landmark €530million biotech investment in Cork.
Centocor, a subsidiary of the US drug giant Johnson & Johnson, said it would not expand its Cork plant until it got a final decision on the grant.
The Government has sought an extension of the deadline for the decision to avoid a formal investigation by the European Commission that could take a further 18 months to complete.
In addition to threatening the Centocor project, the investigation would create further uncertainty about the IDA's ability to offer grants to attract investment.
