Intel will invest $2.7 billion over the next two years to upgrade its chip plant in southern Israel for producing 22nm technology. The Israeli government has contributed a 740 million shekel ($210 million) grant since Intel Israel, which employs 7,057 people, will hire 1,000 people over the coming year as part of the project.

"We are already in preparation for hiring," Maxine Fassberg, general manager of Intel Israel, told a news conference according to Reuters. "We are scheduled to start production in December. There are no plans to build a new plant (in Israel)." The Israeli plant in Kiryat Gat will be Intel's second worldwide to produce the 22nm chips.

The transition to 22nm process technology will start later this year for Intel. The company will also move to a new manufacturing model that will rely on four high volume leading-edge fabrication plants instead of three. The plan will cost Intel $9 billion this year, but US chipmaker claims that with the 22nm manufacturing process it will be able to enter new markets.

"The market opportunities for our 22nm products are outstanding," Intel CEO Paul Otellini said in a statement. "As a result, we are growing from the model of three high volume leading-edge manufacturing fabs to four. Our 22nm process will be the foundation for growing PC and server segments, as well as a broad family of Atom-based SoCs, serving smartphones, tablets, smart TVs, and other embedded devices. We have finished development of the process. We are in yield learning deployment right now, running test ships in there, ramping the yields up on the technology. We have completed the design of our first microprocessor and have working microprocessors on that technology. At this point in time our plan is to ramp production wafers of that technology in the second half of this year with products launched at some point to follow."

Among the most anticipated 22nm products from Intel is codename Ivy Bridge, which will include processors for desktops, laptops, and servers. Intel has already confirmed that it does have working samples of 22nm chips, but while it will start using the process in Q4 2011, the company does not yet want to make any promises regarding mass production.