In 2022, Washington passed the chips act which was giving incentives to the big chip makers of Intel, AMD, Nvidia and Samsung Electronics to build a chip plant in the states instead of offshore in Taiwan and China. The companies responded with Intel making plans to build a $100 billion plant in Ohio and Samsung and TSMC (Taiwan Semiconductor Manufacturing Co) announcing plans to build chip plants. In those respects, the chip act has done its job encouraging chip companies to manufacture in the US. However, computer chips are a global commodity which means other countries can match US incentives.

In an article written by Steven Scheer of Reuters, the government of Israel has offered incentives to Intel and others, but Intel is to build a $25 billion expansion to its Kiryat Gat plant. Intel has been in Israel for over 50 years and has received grants and incentives along the way. The recent $3.2 billion grant was accepted over a lower grant and lower tax rate, according to Ofir Yosefi, deputy director general of Israel’s Investments Authority. The grant is for 5 years with a corporate tax rate of 7.5% as opposed to 5%, the normal tax rate in Israel is 23%. The Kiryat Gat produces Intel 7 technology and the Centrino chip which enables the use of Wifi.

Itel VP Daniel Benatar said the grant will help ensure Israel remains a global center of semiconductor technology and talent. (the talent includes close ties to the Israel University sector).

Intel has been building plants around the world including near Columbus, Ohio in the US and Magdeburg, Germany where it plans to build two plants for $33 billion. The government of Germany has included incentives to Intel.

Linking to dividend paying stocks, a profitable company which can pay dividends tends to be in business for a long time. This long-time framework helps as the company analyzes its assets and builds more. Companies that are expecting to be in business a long-time are great partners for incentives by all levels of governments in multiple countries. Companies can pick and choose where they want to locate, and the incentives allow the company to help maintain margins over their competitors. Investors in dividend paying companies tend to like government incentives, but they raise your expectations to what level of incentives the company receives.

There are more questions than answers, till the next time – to raising questions.