The U.S. semiconductor company Intel said Sunday it had signed an agreement to take over the chip-making plant owned by Micron in Kiryat Gat and would retain most of its staff.

The Micron plant in Kiryat Gat, adjacent to the Intel plant. – Photo: Eliyahu Hershkovitz

The acquisition marks a full circle for Intel, which built the plant 15 years ago, but later developed a much larger facility next door that today serves as the basis for its Israeli manufacturing operations. The Micron plant and its staff are expected to form the basis of a new plant producing 10-micron chips.

“The current deal with Micron once more expresses Intel Corporation’s long-standing commitment to Intel Israel and the State of Israel,” said Maxine Fassberg, vice president of Intel’s worldwide technology and manufacturing group, in a letter to Micron employees Sunday. Fassberg, who also heads the company’s Fab 28 plant in Kiryat Gat, declined to say how the plant would fit into Intel Israel’s expansion plans.

Under the agreement, Intel agreed to offer jobs at Intel to 800 employees now on the Micron payroll, as well to hire 130 more on a temporary basis. Micron Israel currently employs 1,000 people and employs several hundred more through manpower agencies. Intel said it would retain the contractors now servicing the plant.

The agreement is subject to regulatory approval, but is expected to be concluded during the next three months. Intel will assume Micron’s liabilities and continue to manufacture the NOR flash memory chips that the plant has been making.

Intel and the Israeli government have an agreement under which the U.S. company will receive an aid package to expand its operations in the country. In the government’s original 2011 offer, Intel would have received some NIS 1 billion, mostly towards building a major new plant in the north and hiring 2,500 new employees. With Intel’s factory at Kiryat Gat employing about 3,000 people, that would mark a substantial increase in the company’s local workforce.

Sunday’s announcement lifted a major worry over Micron’s staff, whose members faced the prospect of being fired after the company informed them last December it planned to shutter the plant in 2014 after completing its backlog of orders.

“A thousand workplaces at first and thousands more later,” Finance Minister Yair Lapid wrote on his Facebook page in response to the Intel decision, although he had no direct involvement in the negotiations. “It’s a vote of confidence in the local market and in Israel’s human capital.”

The factory was built in 1998 at a cost of $1.6 billion, including $600 million in aid from the government, as Intel’s Fab 18 facility. A decade later, it was transferred by Intel to Numonyx, a company formed by Intel, STMicroelectronics and Francisco Partners and acquired in 2010 by Micron Technology. The factory sits on land owned by Intel and is adjacent to the company’s current plant. Intel had the right of first refusal in Micron’s sale of the plant.

The plant doesn’t make microprocessors so it isn’t engaged in Intel’s core business. It uses wafers with a diameter of 200 millimeters to produce microchips with transistors of 45 and 65 nanometers. Intel abandoned this segment of the business, except for one plant in Massachusetts, when it sold its Numonyx subsidiary to Micron.

View original HAARETZ publication at: http://www.haaretz.com/business/1.549524