I think you have cause and effect confused here. It was only after the Israelis saved INTC's butt that INTC started increasing the size of the design center in Israel and giving them more important work to do.
At any rate, Intel Israel was founded in 1974, and has been growing steadily for over 30 years. It was started by Dov Frohman, the inventor of the EPROM. Israel has been on the short list of sites that actually rates a fab... --Alan