Intel submits plan to further expand fab in Israel worth $5 billion
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schmidtbag
This makes no sense. First of all, Intel doesn't need any grants; they have more money than they know what to do with. Intel's net income every year for the past several years is more than twice as much as the value of this fab. Also, there must have already been some incentives for Intel to keep building their factories in Israel, which probably isn't limited to the reduced tax rate. There are other countries such as Ireland, India, or the Baltic states that I'm sure have lower taxes, aren't under attack, have less political heat, while still having a sustainable infrastructure and skilled workforce. So, why does Intel need such a hefty grant?
To clarify, I have no problem at all with Intel building is Israel - I think it's great. But clearly, Israel was enticing enough as-is. It's kind of like a customer coming to the checkout counter ready to buy a $50 product, and then the cashier is like "here, I'll make this $7 cheaper for you". The customer seemed to have no problem paying full price, regardless of tax, so why lower the price?
Fox2232
I can find few reasons. But they are more political than economical.
And those economical are quite good anyway.
BigMaMaInHouse
Why? because the Israeli minds come up with really great inovations and it's worth for them to invest, Do you remember what saved their ass back in ~2000 after P4 Prescott crap? (all core names are from Hebrew- Dothan/Banias/Yona.. etc).
__hollywood|meo
sure would be nice if they invested in local semiconductor manufacturing instead.
schmidtbag
Like I said, I can totally see why Intel wants to invest in Israel. What I don't understand is why Israel is trying to sweeten a deal that Intel very likely would've accepted regardless.
What I'm questioning is the grant, nothing else.
Kaarme
You must be referring to the same great Israeli minds that came with up with the "shocking" security "vulnerabilities" in the Ryzen CPUs, and gave AMD 24 hours to fix them before making them public. No wonder Intel is suffering from Spectre and Meltdown up to multiple generations if those minds are what they count on.
Just joking, of course.
They make more money than a bunch of small countries combined precisely because they ignore no opportunity to make it, ethics be damned. I imagine these were merely the couple of incentives, the reduced tax and grant, that were made public. Israel being one of the cyber warfare superpowers, I imagine they also occasionally help Intel in commercial espionage, offer free net security assistance, are helpful with foreign experts working for Intel in Israel, ensure Intel doesn't run out of fresh water even if a million ordinary citizens will need to go without, gets cheap electricity, etc.
BigMaMaInHouse
Because Israeli secret intelligence found out that Intel has no problem to **** up all their customers with tooth paste under IHS only to save a penny so they did not wanted to risk it 🙂.
schmidtbag
Intel being cheap or unethical isn't really related to my question. As far as I'm concerned, Intel was going to build this facility in Israel regardless of the grant. Based on the phrasing of the article, the 5% tax reduction was something Intel wanted - that makes sense to me. The grant, however, appears to be something Israel offered. That means Intel didn't ask for it, nor were they expecting it. So in my eyes, that grant is nothing more than "good will", and that just doesn't make sense to me. Israel called it an investment, but the thing about grants is the recipient isn't expected to pay it back*, so it's more like a gift. $700 million is a hefty gift by any definition, but it's just plain unnecessary for a company that's rolling in riches and didn't ask for it. This is what I don't understand.
* You are expected to pay back a grant if you bail on the objective that the money was supposed to fund, so that's what separates it from just being a donation. But, considering the value of this facility, I highly doubt Intel would ever quit.
I agree - as I stated before, I understand why Intel is interested in Israel, but that doesn't answer my question.
Brit90
I have confidence in Intel not adding in Hardware Backdoors to anyone..........
maikai
Because you have to spend money to make money.
“This is to incentivize the company to carry out the future investment that could be significantly higher than past and current investments,” the ministry said
MegaFalloutFan
I went looking for a reason for the 50 million, grant, haven't found it yet but apparently Gen 8 was developed in Israel.
Ok here is the part about investment
P.S. BTW I think that Government grants are not $$$ but tax reductions.
schmidtbag
I can see what you mean when looking at Israel's perspective, but it's a hefty risk. In the perspective of Intel, that doesn't apply at all.
For example, that's like being a multi-millionaire, living debt free, and yet you take out a loan to buy a sports car that you intend to keep indefinitely. That just doesn't make sense - all that does is make the car more expensive in the long run, and makes life more difficult if anything goes wrong. The difference here is Intel doesn't have to pay back anything. That sounds like a crappy deal for both sides:
* In the perspective of Intel, despite having PLENTY of their own money to foot the bill themselves, they're basically adding future obligations to a country. What if the war gets out of hand? What if Israel suffers a resource issue? What if politics complicate things? Is $700m really worth all of that, when Intel could earn twice that in a single quarter?
* In the perspective of Israel, they're not getting any interest from this. They will get their ROI, but there's the thing: Intel was going to get them a cash influx no matter what. So all this does is reduce Israel's net income. You could argue that this grant obligates Intel to stick with Israel in future endeavors (which I would see as a good long-term goal to Israel), but that's a pretty hefty gamble; I'm sure Intel would find a way around that if they really felt the need to.
Remember - Intel continues to build in Israel because of a slew of benefits that overshadow the negative aspects. If Israel wants to keep Intel's business, all they have to do is maintain these benefits. If Intel resists, then offer them a $700m grant.
It isn't totally clear what the specifics of the investments are. If the country expects compensation/interest, then I could totally see it being very well worth it for them to do (but then that goes back to my millionaire-buying-a-car analogy).
I'm not sure that's the case, because in the article, the 5% tax reduction seems to be a distinctly separate thing.
MegaFalloutFan
That tax reduction ends soon, so i guess the grant is for the next one.
It can be land subsidies or whatever, its not cash money for sure
schmidtbag
Ah, in that case this would make more sense - I could see how $700m would be Israel's way of saying "let's pretend this is your tax reduction, once your current one expires".
sykozis
The tax reduction is not ending soon. The tax reduction is being extended until 2027.
Sixtyfps
I think this is a good. I am glad its not China
sverek
Sandy Bridge was developed in Israeli branch. I'd say Intel should have good relationship with it.
fantaskarsef
Somebody has a lot of money to spend.
GAR818
LOL @ Israeli minds...... o_O
Neo Cyrus
Minds from anywhere in the world come up with great innovations. I'd be shocked if it weren't politically motivated somehow, or at the very least is allies working together to make each other richer, just like every other business in the world, rather than taking the best course of action for the company.
