JERUSALEM (Reuters) - Intel Corp said on Tuesday it had submitted plans to expand its production operations in Israel, with the government saying the U.S. chipmaker would invest about $5 billion.
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Intel is one of the biggest employers and exporters in Israel, where many of its new technologies are developed. The new investment will upgrade its Kiryat Gat manufacturing plant in southern Israel, the company said in a statement.
Intel did not provide financial details.
Israel's Finance Ministry said the company would invest about 18 billion shekels ($5 billion) in the factory between 2018-2020 and had agreed to spend 3 billion shekels on local suppliers.
"According to company officials, this investment is expected to pave the way for a future significant investment for a technological upgrade at the Israeli site," the ministry said in a statement.
In return, Intel will be granted an extension of its reduced tax rate of 5 percent until 2027. The Finance Ministry said it was also considering giving Intel a 700 million shekel grant, with a second grant of the same size to come with future investments.
"This is to incentivize the company to carry out the future investment that could be significantly higher than past and current investments," the ministry said.
Intel said it exported $3.6 billion of goods and services from Israel in 2017, about 8 percent of the country's total hi-tech exports.
(Reporting by Ari Rabinovitch; Editing by Jason Neely and Mark Potter)