(Globes (Tel Aviv) Via Acquire Media NewsEdge) Dec. 19--"The forthcoming shutdown of activity by Micron in Israel is only a symptom of a deep and disturbing problem: in the past decade, we have lost our national focus and neglected the high-tech industry," former General Manager of Motorola Communications Israel Ltd. and chairman of the Israel Association of Electronics and Software Industries Elisha Yanay warned today, talking to "Globes". Yanay was referring to the plan by Micron Technology Inc. to wind down its manufacturing activity in Israel by 2015.
In the meanwhile, the company has put its fab in Kiryat Gat up for sale. The fab, Fab 18, was Intel's first operation in the southern town. If however no buyer is found, Micron intends to close it, and to lay off its 1,100 employees and another 800 contract workers currently employed there.
Micron's plan is to split the semiconductor production at Kiryat Gat between two other company sites, in Singapore and Virginia. "The world is in economic crisis; the giant companies are subject to this crisis, and Micron among them," said Yanay. "Nevertheless," he continued, "high-tech continues to sell around the world, and the scale of Israeli exports in the industry is negligible in comparison with the global market. There is broad activity in high tech around the world, but in the past five years, Israeli companies have transferred at least 20,000 jobs to India and the Far East, mainly because of the dollar-shekel exchange rate."
Yanay estimated that Israel's high-tech exports would fall next year, because of the continuing global economic crisis. In 2011, Israel's high-tech exports were worth $25 billion, about 60 percent of the country's total industrial exports.
The Ministry of Industry, Trade and Labor recently set up a special working team to find a formula that will remove the danger of unemployment for the Micron workers in Kiryat Gat. The team, led by the ministry's director general Sharon Kedmi, is looking at possible ways of ensuring the future of the fab, including promoting acquisition by Intel, whose own fabs are nearby, or by Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM). Calculations by the ministry show that if one of these two companies were to buy Micron's fab and take on its workers, it would receive aid to the tune of NIS 100-150 million from the state on the basis of existing aid tracks.
At a routine meeting with Intel Israel general manager Maxine Fassberg, Kedmi raised the possibility of Intel buying the Micron fab, in an attempt to avoid a severe blow to the semiconductor industry in Israel and to one of the main sources of employment in Kiryat Gat. Intel, which has no activity similar to that of the Micron fab, and may not be interested in such activity, is considering the matter, though it is not certain with what degree of enthusiasm.
Government sources familiar with the matter estimated today that efforts would grow over the coming months to find a solution for the Micron fab, after it had become clear that the chances of changing the strategic decision by Micron's US management to leave Israel were slim. "Although this is a severe threat, it's not a danger that lies in wait for us tomorrow morning. In the coming months we will step up efforts to find a solution for the fab and its workers, as the thinning out of the workforce is due to start only at the end of 2013. This gives us enough time to think and move ahead," one of the sources said.
(c)2012 the Globes (Tel Aviv, Israel)
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