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Intel to close Jerusalem plant; employees transferred

Israel’s largest tech employer Intel is to restructure and cut back on its workforce. The company announced that it will be closing its production plant in Jerusalem.
intel production plant

Israel: Jerusalem based production plant ‘Intel Israel’ will be winding up by the end of the year and 170 employees will be transferred to Kiryat Gat fab in southern Israel, reported have revealed. Only a small number of employees will be laid off. This was recently announced as a part of Intel’s global streamlining plan, which involves the chipmaker to reduce its workforce worldwide by 12% including several hundred Intel Israel employees. Nearly all of the 170 workers will stay on with the company but will be transferred to Intel’s large Kiryat Gat production facility 70 kilometers from the capital.

Intel Israel declined to comment on the matter. Intel also announced that Intel’s development center in Jerusalem will not be affected by the closure of the production plant. Many Intel Israel employees have received dismissal notifications over the past few weeks as a part of the global layoffs. This also includes workers in Kiryat Gat.

Beside this layoffs, Intel is also hiring employees ahead of the opening of the new upgraded plant in Kiryat Gat. The upgraded plant in Kiryat is expected to start next year, and will be having about 4,000 employees. After Intel’s global streamlining plan, management has stressed that the company will keep all its commitments to the Israeli government regarding the large grant it has received.

Intel Israel is the country’s largest single employer, with over 10,000 employees and tens of thousands more in companies that supply it with products and services.

In order to compete in the Internet of Things era, Intel announced that it needed to do some “restructuring”. The restructuring will accelerate the evolution of Intel from a PC company to one that powers the cloud and billions of smart, connected computing devices. High-growth areas where it is positioned for long-term leadership, customer value and growth, will be intensified and focused in, while making the company more efficient and profitable.

Those billions of smart connected devices includes mobile devices – smartphones, tablets, and other internet devices. Israel is a world center for Intel’s processor development – with processors generally going into PCs and laptops, the exact devices Intel is “accelerating away” from. On the other hand, Skylake – the new processor developed largely at Intel Israel and the building block of the next generation of its range of devices – comes in various sizes, with changes for laptops, tablets, mobile devices, and even for internet devices.

Indeed, the company is looking for IoT to greatly expand chip business, which is Intel’s core activity. Fifty billion IoT devices will be coming online in the next decade, experts reported. The company that builds the slimmest, most powerful, and best-connected chips with the most capabilities and features is likely to dominate the industry. Intel opened an IoT lab in Haifa last year.

In 2014, Intel announced that it would upgrade the Kiryat Gat facility to produce its next generation of computer chips. That announcement concluded on a long-running drama as the company considered where to build a new plant to produce advanced 10-nanometer chips. The chips will power new wearable technology and perceptual computing devices. Intel believes these nanochips will be a major growth area for the company in the coming years. Intel was said to be considering building the plant in either Israel or Ireland.

The Israeli government promised by that it would provide Intel with major tax breaks and other benefits worth $600 million – with commitments by Intel to continue growing its presence in Israel.Those commitments includes an increase in production capacity in the refurbished plant compared to previous production levels; a guarantee that workers will continue to be employed, even if Intel’s business falls off; an increase of at least 10% annually in the value of local purchases made by Intel; and also based on 2013 figures; funding more academic research projects and providing more scholarships for Israeli students, to the tune of at least $1 million a year; and a commitment to give Israeli workers and contractors preference in the plant upgrade work.

Intel said on wednesday that it continues to advance its evolution as a company and that it would close the Jerusalem facility as it integrated the activities there to other locations. All the workers who will be affected by this transition process will be helped by the Intel, and majority of them will be offered other roles in Intel, mostly at the Kiryat Gat facility. Most of the employees at the Jerusalem R&D facility will work as usual and will not be affected by this process.

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