Intel confirmed on Monday that it would hire some 800 full-time employees and 200 contract workers from the Israeli branch of chip giant Micron, after the Boise-based company announced last year that it would shut down operations at its Kiryat Gat plant.
Under the deal, Intel will also take over the plant — which Intel itself built 15 years ago, before constructing its more up-to-date Fab 28 plant right next door in 2006.
The Micron fab was set to close only in 2015 unless a buyer could be found, company officials said earlier this year. The closure of the plant was announced last December.
Intel still owns the plant, having leased it to Micron after Fab 28 was built. Under this week's agreement, Intel will take full possession of the facility.
For the time being, Intel will manufacture NOR flash memories for Micron following the closing of the transaction, but according to media reports, the company will refurbish the plant to make it capable of manufacturing 10-nanometer chips.
Speaking at an Intel event earlier this year, Intel corporate VP Mooly Eden said that one of Intel's objectives is to gear up the Kiryat Gat fab to eventually produce 10nm 3D chips.
Fab 28 is Intel's largest producer of the 22nm chips which are powering the third generation of Ultrabooks. Intel invested $1bn in its Israel operation in 2012, much of it to upgrade the Kiryat Gat plant to produce the 22nm chips, Eden said.
The deal was long expected: a report in June said that Intel had proposed taking over the Micron plant and retaining the workers — if the government agreed to provide Intel with assistance for upgrading the plant. Intel is said to be seeking a grant of between $300m and $400m, amounting to 10 percent of the cost of construction.
Besides the full-time workers, Intel will also retain some 200 contractors currently employed by Micron. The deal is subject to government approval, but the Micron closure has been a major concern for Israeli politicians – considering the country's reputation as a tech centre — so approval is not expected to be an issue. The transaction is expected to close in the fourth quarter of this year.
The new Intel hires will grow the company's Israeli workforce to an all-time high. Intel Israel already employs nearly 8,000 workers directly, and is indirectly responsible, through suppliers and subsidiaries, for the employment of some 25,000 people. Directly and indirectly, the company employs 10 percent of all workers in the electronics and software industry in Israel.
Maxine Fassberg, VP of Intel's technology and manufacturing group, Fab 28 plant manager, and Intel Israel general manager, said the deal "once again exhibits Intel Corporation's longtime commitment to Intel Israel and to the State of Israel".
"Returning the Micron facility to Intel's possession is an important business move on Intel's part," she said. "Micron Israel has talented people who will contribute to Intel's continuous growth and development."