Israel bids to scupper Intel Ireland fab deal

Intel is being lobbied by the Israeli government to change its mind about building a new chip fab in Ireland - a move that would scupper plans to expand its existing Fab 28 facility in Kiryat Gat.

Intel is set to spend $4.8 billion on a 15-nanometre process plant in Ireland, reports IT news site Techeye - wooed, no doubt, by the financial sweeteners being offered by the Irish government to attract much-need investment.

In June, the chip giant had asked Israel's Ministry of Industry's Investment Promotion Centre for a $600 million grant to upgrade Fab 28, but a lower Israeli counter-offer, tied to the creation of a new assembly plant in Beit She'an in the north of Israel, sent Intel packing - and straight into talks with the Irish.

Now Israeli newspaper Globes is quoting Israel's Ministries of Finance and Industry, Trade and Labour as saying they were surprised that Intel did not haggle - and is pushing hard to get the IT giant to change its mind.

"They are thinking hard about the feasibility of an investment in Ireland, because that would cost them much more money than in Israel," said the source. "In Ireland, they would have to build a new infrastructure which already exists in Kiryat Gat. Also, the economic situation in Europe and the uncertainty in local markets is causing second thoughts."

Intel is due to make a final decision within two months - though Intel's US office, staffed by a number of former Intel Irelanders, is believed to be leaning toward the European destination.