Intel has struck a significant deal with the Israeli government, agreeing to contribute $3.2 billion in grants toward the development of a massive $25 billion chip fabrication plant in Kiryat Gat, Israel. This venture, slated for operation by 2028, represents Intel’s most substantial investment in the region yet and is seen as a move to fortify its global supply chain. Despite ongoing tensions in the area, Intel’s decision to expand in Israel aligns with its long-standing presence in the country, where it has operated for nearly five decades and employs around 10% of its global workforce.
This move underscores Intel’s strategic commitment to expanding manufacturing capacity and competing against key foundry rivals like TSMC and Samsung. The investment marks part of Intel’s broader initiative following CEO Pat Gelsinger’s return in 2021, where the company announced various new fab projects across multiple locations. Intel’s expansion plans encompass not just Israel but also projects in Arizona, Ohio, and Germany, alongside efforts to modernize existing operations in New Mexico, Oregon, and Ireland.
The decision to build in Kiryat Gat is strategically significant despite the region’s geopolitical challenges, emphasizing Intel’s confidence in its Israeli operations and its history of successful acquisitions of Israeli tech startups like Mobileye and Habana Labs. The new fab in Kiryat Gat, where Intel currently manufactures chips on its Intel 7 (10nm) process node, is expected to significantly increase employment when operational. However, specific details about the targeted process technology remain undisclosed.
The construction has already commenced, and while it incurs a higher corporate tax rate for Intel, negotiated as part of the deal, it still remains below the standard rate. This substantial investment solidifies Intel’s commitment to expanding its manufacturing footprint globally, ensuring a more robust supply chain amid increasing competition in the semiconductor industry.
