Israel’s government agreed to provide Intel with a $3.2 billion grant for a new chip plant costing $25 billion in southern Israel. This marks the largest investment ever made by a company in Israel. The agreement comes amid Israel’s conflict with the Palestinian militant group Hamas, following the October 7 attack by Hamas on Israel.
The generous offer from Israel’s government and the major U.S. company’s support is significant, especially as the U.S. has been urging Israel to take steps to minimize civilian harm in Gaza.
Intel stated that the expansion plan for its Kiryat Gat site, located 42 km (26 miles) from Hamas-controlled Gaza, is a crucial part of the company’s efforts to strengthen the global supply chain. This aligns with Intel’s ongoing and planned investments in manufacturing in Europe and the United States, aiming for a more resilient supply chain.
Under CEO Pat Gelsinger, Intel has invested billions in constructing factories on three continents to regain its leadership in chip-making and better compete with AMD, Nvidia, and Samsung. The new plant in Israel is the latest addition to Intel’s investments in recent years.
Intel Investing Billions in Chips
Intel intends to invest over 30 billion euros (equivalent to $33 billion) in establishing two chip-making facilities in Magdeburg. This move is a key component of Intel’s multi-billion-dollar investment initiative in Europe to enhance chip production capacity. Berlin has committed substantial subsidies to entice the largest-ever foreign investment in Germany.
In 2022, Intel announced a potential investment of up to $100 billion to construct what could become the world’s largest chip-making complex in Ohio. Additionally, competitors such as Samsung and Taiwan Semiconductor Manufacturing Co (TSMC) have unveiled significant investment plans in the United States.
Israel’s finance and economy ministries expressed that Intel’s investment, particularly during this period and considering the global competition for substantial investments in the chip industry, reflects significant confidence in Israel’s economy. They emphasized that the investment brings direct fiscal advantages to Israel, surpassing the state’s grant by a significant margin.
Finance Minister Bezalel Smotrich stated, “This investment, occurring during a time when Israel is actively combating profound challenges, represents a commitment to the just and virtuous principles that contribute to the progress of humanity.”
In addition to the grant, which constitutes 12.8% of the total investment, according to a Reuters report. The chipmaker has also committed to purchasing goods and services worth 60 billion shekels ($16.6 billion) from Israeli suppliers over the next decade. The construction of the new facility is anticipated to generate several thousand jobs.
Intel in Israel
Intel first established its presence in Israel in 1974 and currently operates four development and production sites in the country. Among these is the manufacturing plant in Kiryat Gat, known as Fab 28, specializing in Intel 7 technology (10 nanometer chips). The company employs nearly 12,000 people directly in the country and indirectly supports an additional 42,000 jobs.
Intel’s exports, valued at approximately $9 billion, make up 5.5% of the total high-tech exports. As one of around 500 multinational companies in Israel, Intel, which acquired Israeli self-driving auto technology firm Mobileye for $15.3 billion in 2017, has not disclosed the specific technology that will be produced at the newly initiated Fab 38 plant.
Although Prime Minister Benjamin Netanyahu announced in June that Intel would construct a new $25 billion chip plant in Israel, Intel had refrained from officially confirming the investment until now. The Fab 38 plant is scheduled to commence operations in 2028 and continue operating until 2035.
Conclusion
Intel’s huge $25 billion investment in an Israeli chip plant, supported by a $3.2 billion grant, is a significant move during regional tensions. It’s Israel’s biggest company investment. Intel’s global plans for strong supply chains include major investments in Europe, showing trust in Israel’s economy and enhancing Intel’s competitive position.
