Intel's planned new plant in Kiryat Gat, Israel may be the next victim of its fab expansion slowdown, according to a local government source cited by business paper the Globes.

Intel last week confirmed that it had put construction plans on hold in Ireland and Massachusetts.

The unnamed Israeli local government source may be second-guessing Intel, rather than having any insider knowledge, judging from his or her comments to the Globes. "Intel explained to us that the Kiryat Gat plant was scheduled to be set up after the Irish plant. Following the suspension of Intel's plant in Ireland, we're expecting our plant to be suspended too. It's not as certain as it used to be."

That "suspension" was last week's decision to delay the $2 billion expansion of Chipzilla's Leixlip, Ireland plant, aka Fab 24, until 2003. On Friday, Intel also said it would drop a $500 million expansion plan at Fab 17 in Hudson, Massachusetts.

A "senior" source within Israel's Ministry of Industry and Trade told the Globes: "In view of reduced demand, it doesn't look as if Intel is in a hurry to set up the plan in Kiryat Gat."

This source alleges Intel had signed the agreement to build the plant as much to ensure it retained its right to local tax breaks as to create a new fab for itself. "Under the agreement, even after plans are submitted in two months, the company has two years to start setting up the plant," the source claimed.

Terry Shannon, editor of Shannon Knows Compaq, writes It was just three months ago that Chipzilla announced a $1bn investment in the Commonwealth of Taxachusetts. Included in this was a $750M upgrade of the former DEC Fab-6 foundry in Hudson, MA.

Changing its mind last week, Chipzilla put the Fab-6 expansion on indefinite hold. In Hudson, construction workers have already begun laying the foundation for the 50,000-square-foot structure, known as Mod 4 in Chipzilla-speak. Intel spokesman Patrick Ward said that once this work is complete, the site will be mothballed until the economy picks up. "It really depends on business conditions," he said. ®

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