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TEL AVIV (Reuters) - Intel Corp, the world's No. 1 chipmaker, is in talks with the Israeli government about a $10 billion (6.5 billion pounds) investment in Israel, a senior government official told the Yedioth Ahronoth newspaper on Tuesday.
"Intel is talking with us about a huge investment of $10 billion," Nahum Itzkovich, the new director of the Economy Ministry's Investment Centre, said in his first interview since assuming office. "We are engaged in intensive negotiations with Intel."
Under discussion is an investment of $3 billion to upgrade the existing Fab 28 factory in the southern town of Kiryat Gat, and another $7 billion in a new factory in the town over the course of 10 years, he said.
The government has set up a negotiating team that includes Economy Minister Naftali Bennett.
"Contrary to Intel's previous investment, we are trying this time to create a long-term process in which each side will commit for at least 10 years," Itzkovich said.
He did not say how much of a grant or subsidy the government was considering providing Intel for the new investment.
A spokesman for Intel declined to comment on the report and officials at the ministry were not immediately available for comment.
Intel's last overseas investment was made in Ireland and if it does not build a factory in Israel this time the country could find itself no longer relevant to Intel, Itzkovich said.
"We are talking about a manufacturing facility that has incredible impact on the Israeli economy," he said. "That said, it is incumbent upon us to examine the worthwhileness and to explain to the public what the benefits are and what the considerations are if we approve the investment."
Intel will build chips over the next two to three years with features measuring just 14 nm in Ireland and the United States but the company is already thinking about where it will produce 10 nm chips. Intel Israel executives said in February they would like to see 10 nm production in Israel.
Intel has invested $10.5 billion in Israel in the past decade, including $1.1 billion in 2012, and has received $1.3 billion in government grants.
Reporting by Tova Cohen