U.S. chipmaker Intel will invest $2.7 billion over the next two years upgrading its plant in southern Israel to produce its next generation of chips.

The amount includes a 740 million shekel ($210 million) grant recently approved by the Israeli government.

�We are already in preparation for hiring,� Maxine Fassberg, general manager of Intel Israel, told a news conference on Tuesday. �We are scheduled to start production in December.�

Intel, the world�s No.1 chipmaker, opened its $3.5 billion Fab 28 chip plant in the Israeli town of Kiryat Gat in 2008 and makes processors with 45-nanometer circuitry.

Fassberg said the Kiryat Gat plant will be Intel�s second worldwide to produce the smaller, next-generation 22-nanometer chips. The first will be in the United States.

Intel Israel, which employs 7,057 people, will hire 1,000 people over the coming year to support the expansion.

Intel Israel�s exports in 2010 fell to $2.7 billion from a record $3.4 billion in 2009 even though sales volume rose. This is due to Intel accounting rules regarding revenue recognition for 2009, Aviad Avni, Intel Israel�s finance manager, said.

Intel Israel exports all its production to its parent company in the United States.

Intel is the largest private sector exporter in Israel.

(Source: Intel)