JERUSALEM, May 5 (Reuters) - Chip giant Intel Corp submitted a plan to Israel's government to invest 20 billion shekels ($5.8 billion) in upgrading its plant in southern Israel, the Economy Ministry said on Monday.

The ministry said it promised Intel it would work to expedite bureaucratic procedures as much as possible to develop and promote employment in the country's south.

As part of the investment, Intel would receive a government grant that Israeli media estimated at about 1 billion shekels.

They also reported that Intel would add about 1,200 new jobs.

It is widely believed that Intel's investment is aimed at shifting to new 10 nanometre technology.

A company spokesman declined to comment but Intel in January had said it would decide on the location of a 10 nanometre plant this year. Israel was one of a number of countries competing to host the new plant.

Intel Israel's exports, mainly from its Fab 28 plant in Kiryat Gat, amounted to $3.8 billion in 2013, down from $4.6 billion the year before.

In its 40 years in Israel, Intel has invested $10.8 billion in plants and development centres and received $1.5 billion in grants. It employs nearly 10,000 people.

($1 = 3.4560 shekels) (Reporting by Steven Scheer)