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Intel to Receive $3.2 Billion Grant for New Chip Plant in Israel

2023.12.27

 

Key Takeaways

  • Intel plans a $25 billion chip plant in Israel, supported by a $3.2 billion government grant.
  • The investment reflects confidence in Israel’s economy and aims to strengthen the global chip supply chain.

Intel’s Historic Investment in Israel

In a landmark move, Intel has announced plans to build a new $25 billion chip manufacturing plant in southern Israel, near Kiryat Gat. This decision comes amidst the ongoing conflict with Hamas, representing a strong commitment from a major U.S. corporation and a substantial backing from the Israeli government during a time of heightened regional tensions.

 

Intel’s expansion plan is a crucial part of its strategy to fortify the global chip supply chain. This initiative aligns with CEO Pat Gelsinger’s broader vision of reviving Intel’s leadership in the semiconductor industry and enhancing its competitiveness against key players like AMD, Nvidia, and Samsung. The Kiryat Gat site, located 42 km from the Gaza Strip, is poised to play a pivotal role in this global endeavor.

International Expansion and Subsidies

Intel’s global investment spree extends beyond Israel, with over 30 billion euros earmarked for two new plants in Magdeburg, Germany. This is part of a multi-billion-dollar effort across Europe, complemented by a proposed $100 billion chip-making complex in Ohio, USA. These moves highlight Intel’s aggressive approach to reclaiming its dominance in the semiconductor market.

Israel’s Economic Benefits

The Israeli finance and economy ministries have emphasized the substantial fiscal advantages of Intel’s investment. This initiative is seen as a vote of confidence in Israel’s economy, with benefits greatly exceeding the state’s grant. Finance Minister Bezalel Smotrich lauded the investment as a commitment to progress and righteous values, particularly significant during Israel’s conflict with Hamas.

Intel’s Commitment and Impact on Israel

Beyond the financial grant, Intel has pledged to procure 60 billion shekels ($16.6 billion) worth of goods and services from Israeli suppliers over the next decade. The new facility, dubbed Fab 38, is expected to create thousands of jobs, bolstering Intel’s already significant presence in Israel. The company, which has been operating in Israel since 1974, plays a crucial role in the nation’s high-tech exports and indirect employment.

 

Intel, a key multinational player in Israel, has not disclosed the specific technology to be produced at Fab 38. The plant, set to open in 2028 and operate through 2035, marks another chapter in Intel’s long-standing relationship with Israel, including its acquisition of Mobileye in 2017. This investment underscores the technological and economic synergy between Intel and Israel.

 


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