The State of Israel has agreed to grant

Intel

(Nasdaq:INTC) $400 million for a new facility in Kiryat Gat.

At mid-day on Monday, Finance Minister Avraham Shochat signed by fax a document with Intel's international management, stating that the government will offer Intel $400 million, should the company set up a second facility in Kiryat Gat. That sum comprises 12.5% of the total $3.5 billion investment in a second Kiryat Gat facility. Israel contributed 35% of the cost of establishing Intel's first facility in Kiryat Gat.

Intel says that the new plant will directly employ 3,000 workers, while indirectly providing work for an additional 9,000 local workers.

The multinational corporation points out that plant it has in Kiryat Gat is an astounding success by international standards, and has made a decisive contribution to Israeli hi-tech exports. Intel Israel reported $2 billion worth of exports in 2000, the highest figure of any Israeli hi-tech company.

Shochat said the signing of the document agreement is a great day for the Israeli economy. He said the move was not geared towards the election tomorrow, pointing out that negotiations with Intel have been going on since May. "If adding 12,000 jobs is electioneering, I support electioneering," Shochat said.

A spokesperson for Intel said in response that the company has not made a final decision to set up another plant in Kiryat Gat, and that the issue will now be looked into by the company's management.

Intel Israel today consists of a development center in Omer, next to Be'er Sheva; two centers in Jerusalem, one for design and one for production; a production facility in Kiryat Gat; and development centers in Yakum, Haifa, Tefen and Petah Tikvah.

Intel to develop chips for next-generation laptops in Israel

Last week Intel Israel chief Dedi Perlmutter said the corporation will be developing chips for the next generation of laptop computers in Israel, where its productivity per worker is the highest in the world.

The project entails developing a completely new platform, including the core processor chip and a chipset installed next to it. The chipset will direct communications between the processor other laptop components such as the memory, hard disk, and peripherals.

"Until now Intel has developed only processors for desktop computers, and after that it made minor changes to adapt them to laptops. Today, the new computers are very thin. A gap has developed between the demands of the laptop computer and the demands of the processors it uses," Perlmutter said.