This is part of Intel’s promise to spend a total of $6 billion to upgrade its Kiryat Gat plant for the manufacture of new advanced chips for its next generation devices.
The $550 is part of Intel’s offset purchase arrangement with the state, which is providing the company with grants of up to $600 million over the next five years as well as a major tax break through 2023. Intel will get two $300 million grants, distribution of which will be spread over five budget years.
Although these figures look great for Chipzilla, executives will be happier with the news that it will only have to pay a corporate tax of only five percent until 2023. Others in Israel have to give the tax man 26.5 percent. In return, Intel committed to hiring at least 1,000 new employees, at least half of whom will be residents of communities in southern Israel. In addition, the company promised to spend at least $550 million.
Intel is committing to spend what it is getting from the government in direct grants, but the Economy Ministry claims the arrangement was great for the Israeli economy.
“This arrangement will have a very positive effect on hundreds of small businesses and suppliers,” said Ziva Eiger, director of investments at the Industrial Cooperation Authority.
“Offset agreements such as this are platforms for leveraging public expenditures for the benefit of the Israeli economy, both for training and encouraging further expansion of small suppliers for the local and world market, and to enhance Israel’s brand as an attractive place for foreign investment,” Eiger added.
“As a result of this agreement, Israelis can look forward to thousands of more jobs being available. It is a model for offset agreements that can provide benefits to all sides.”