The trial of Intel CEO who managed to shake up the company’s 4,900 employees in Kiryat Gat


4,900 employees of the Intel factory in Kiryat Gat got up with a strange feeling this morning (Sunday). The job promised to them was shocked by one sentence that company CEO Bob Swan said “We are considering outsourcing some of our future manufacturing operations which will be integrated into our own production. In order to give the best solution to our customers, we are considering every option, from using foreign manufacturers to using our own production or a combination of the two. ”

Swan’s statement fits in well with the current global trend of Intel’s competing chips companies to focus on development and leave production to others.

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The scenario of transferring the work from the Intel plant in Kiryat Gat to another manufacturer is probably possible but not very close. Intel is now talking mainly about using more manufacturers to back it up and less about manufacturers who will take ownership of the company’s plants at this stage. The company’s difficulty in delivering chips on time has led it to the realization that it must be assisted by external manufacturing, whether as a complement or as an alternative means. The big question is of course what will happen if Intel falls in love with outsourcing and realizes that its time in the manufacturing world has come to an end.

Such an understanding of the company could lead it to the decision to put all its manufacturing operations up for sale to giants like it or to investment funds that would turn all of Intel’s manufacturing plants into a huge tens of billions of dollars manufacturing company with a guaranteed customer. In such a case, the cloud, which today is almost non-existent at the Intel plant in Kiryat Gat and its 4,900 employees, will become a real cloud and the uncertainty will become real and clear.

Intel offices in Petah Tikva Photo: Reuters

On Thursday, the company’s second quarter reports came out, including the following: Production of the 7NM chips is significantly delayed and these will be launched only in 2022 instead of 2021 as planned; One year delay in the company’s roadmap. This was accompanied by a statement from the company’s CEO and the company’s share fell 16% on Friday, to its worst day in 20 years.

Intel, which is also the largest employer in Israeli high-tech, is considered the leading manufacturer of advanced production in the United States. And while the company shed $ 41 billion in value in a single day, Taiwanese chipmaker TSMC added $ 33 billion to itss and competitors like Nvidia and AMD also enjoyed nice lifts.

Intel chips Intel chips Photo: Intel

Not all chip companies are based on in-house production, Nvidia and Qualcomm for example both use TSMC’s services and in fact Intel’s announcement that it will consider using outsourcing is only intended to help it reduce the delay in launching the 7 “chips in question.

But this announcement comes after a challenging time for the chip giant. Just a few months ago Apple announced that it would move to rely on chips it had developed itself for its Macs and although this was not a severe economic blow for Intel, it was, without a doubt, a severe blow to the brand.

Although the company’s quarterly reports also contained some good news (such as a 7% increase in chipsets for desktops and laptops and the announcement of the launch of the 10nm chips after long delays), these were swallowed up by the job news about the 7s chips. “M. Many analysts saw this as a sign of the omission of the reins by the company that has led the world of chips for years. The 7-inch chips are the next generation in the field and the growing concern is that such a significant delay will create a gap that Intel will not be able to close.

Intel CEO Bob Swan Intel CEO Bob Swan Photo: Bloomberg

Intel Israel without factory

Intel currently employs almost 14,000 people in Israel, and if the outsourcing program is implemented, it may also have an impact on Israel. Today, Intel manufactures the 10-inch chips at its plant in Kiryat Gat, but its new and talked-about plant is expected to be dedicated, according to estimates and reports, to the 7-inch chips in question. Intel has not yet clarified whether outsourcing is intended to transfer full production lines or only to strengthen production, but in any case it is likely that plans in Israel will change accordingly.

Intel Israel, without a manufacturing plant that sends branches to the entire Israeli economy, is another development center in Israel, such as Microsoft, Google, Apple and every other giant. Although much larger, the footprint of a company that produces here is much more significant than a development center that employs mainly engineers and its activities focus mainly on the center and Haifa. There are no development centers in Kiryat Gat and a company that only deals with advanced technological development does not have a touch for the common people.

Intel Kiryat Gat Intel Kiryat Gat Photo: Herzl Yosef

Intel’s scenario without a factory is a very far-reaching scenario that probably looks several years ahead, but if it is implemented, Intel Israel will be very different without manufacturing activity in the country. Going beyond outsourcing Intel’s manufacturing plants means that all 4,900 Intel employees will become employees of TSMC’s the world’s largest manufacturer of chips or any other body that will covet the pearl called Intel’s manufacturing plants.

To date, the State of Israel has flowed billions of shekels to the Intel Israel plant in Kiryat Gat in all its incarnations and is at the heart of a process of significant expansion of the plant with support of about half a billion shekels and a commitment by the American giant to continue operating it.

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