It spent 14m ($25m) on the new factory in Kiryat Gat 40km south of its current facility, and is also investing in a similar ink factory in Singapore to serve the Asian market.

The move came after reports in the Israeli press suggested that HP was threatening to move its operations out of Israel unless it got more favourable tax breaks on its investments there.

HP Indigo Division vice president Alon Bar-Shany denied the report in Globes that the firm would move HP Indigo R&D and manufacturing stating "there will be no change", although he did add "there is an element of truth in that internal investment needs to be competitive". Israel is in the final stages of drafting new laws on high-tech investment.

HP Indigo founder Benny Landa is pictured cutting the ribbon to open the plant.

Story by Barney Cox