Intel funding creates Israeli storm

A recent decision by the Israeli government to give Chipzilla huge wodges of cash in sweeteners to expand the semiconductor factory in Kiryat Gat is creating a storm in the Promised Land

The Israelis wrote a cheque for $205 million to Intel to subsidise the expansion of its new Fab 28.

Although the decision still needs final approval by the Finance Ministry, Knesset committees and by Intel, fierce debate rages.

Commentators in the Israeli press are evenly divided on the matter. The obvious argument is that Chipzilla brings much-needed jobs to Kiryat Gat. The town is in the northern Negev and about half of Kiryat Gat’s workers earn only the minimum wage.

It is a region of high unemployment and expanding Fab 28 will create 570 new wellpaying jobs directly, bringing employment to a total of 3,100 workers at the Kiryat Gat plant.

However, others, like the Jerusalem Post, point out that $205 million to create only 570 jobs is not exactly cost effective.

What is more likely is that the Israelis need to stop losing industrial production. Although the country is at the forefront of industrial inventions, most of them are built in Asia.

But the idea of subsidising Intel grates with many, particularly as the country has already paid grants of over $1 billon. to Intel plants.

All this is happening while the Israeli Finance Ministry has slashed the 2011 budget of the Chief Scientist’s Office (OCS) to $270 million.

Since this money funds start-ups and R&D which has been the life blood of Israel’s invention industry, one has to question why this cash was given to a company which would only give it to shareholders.

Perhaps the problem is that the Israeli’s cannot stop feeding their addiction to Chipzilla. After all it was Israeli engineers that convinced the outfit to start making the Pentium. The rest is history.