JERUSALEM, Oct 4 (Reuters) - Intel Corp INTC.O will invest 10 billion shekels ($2.75 billion) from 2011-18 to upgrade its main chip plant in Israel, the government said on Monday.

Israel will provide a grant of up to 741 million shekels to help Intel, the world’s No. 1 chipmaker, expand its plant in the southern city of Kiryat Gat, the finance and industry and trade ministries said in a statement.

An Intel spokesman confirmed that the company would upgrade its technology at the plant. Intel, one of Israel’s largest exporters, opened its Fab 28 chip plant two years ago and makes processors with 45-nanometre circuitry.

“We are talking about a significant step in the state supporting industry in Israel,” the ministries statement said, adding they saw “great importance in the cooperation between Intel and Israel”.

The grant, dependent on Intel sharply increasing the amount of Israeli workers at the plant, will be for up to 678 million shekels. Intel has an option for another 63 million shekels should it also expand its research and development operations in Israel’s periphery or invest in research through Israeli institutions. (Reporting by Steven Scheer; Editing by Dan Lalor) ($1 = 3.63 shekels)