Intel invests $25bn to build Israeli chip factory in country’s ‘largest investment ever’

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Intel invests $25bn to build Israeli chip factory in country’s ‘largest investment ever’

American tech giant employs close to 12,000 people in Israel as it plans to expand significantly in south of the country

Intel, the US tech giant, will invest $25bn in Israel after securing $3.2bn in incentives from the country’s government. It is credited as being the largest investment ever in Israel by a company.

The commitment is a huge nod to the Israel and its tech sector, which has faced a challenging year –  the war came on top of the judicial reforms crisis, a soft global economy and a tech downturn. It is also a generous offer by Israel’s government at a time when Washington has increased pressure on Israel to take further steps to minimise civilian harm in Gaza.

The outlay, announced by the Israeli government in June and unconfirmed by Intel until now, will go towards expansion of the company’s wafer fabrication site in Kiryat Gat, south of Tel Aviv. The Fab 38 plant is due to open in 2028 and operate through 2035.

The expansion plan for the Kiryat Gat site, where its existing chip plant is 42km (26 miles) from Hamas-controlled Gaza, is an “important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States,” Intel said in a statement.

Intel CEO Patrick Gelsinger tells Fox Business that ‘Israelis are the most resilient people on Earth’

The announcement comes two weeks after Intel CEO Patrick Gelsinger expresseed the company’s ongoing support for Israel, telling Fox Business that “Israelis are the most resilient people on earth.”

Under Gelsinger, Intel has invested billions in building factories across three continents to restore its dominance in chip-making and better compete with rivals AMD (AMD.O), Nvidia (NVDA.O) and Samsung (005930.KS). The new Israeli plant is the latest investment by the US chipmaker in recent years.

“Support from the Israel government will … ensure that Israel remains a global centre of semiconductor technology and talent,” Intel vice president Daniel Benatar said.

Ofir Yosefi, deputy director general of Israel’s Investments Authority, said Intel chose a higher grant and tax rate over an offer for a lower grant and lower tax rate.

He told Reuters the process took months since a grant of such magnitude needed a review and independent analysis that it was economically viable. It was determined Israel would reap much higher fiscal and economic benefits, he added.

Israel’s finance and economy ministries said Intel’s investment, especially in this period and in light of the global competition to attract significant investments in the field of chips, is a significant expression of confidence in Israel’s economy.

Finance minister Bezalel Smotrich said: “This investment, at a time when Israel wages war against utter wickedness, a war in which good must defeat evil, is an investment in the right and righteous values that spell progress for humanity.”

In addition to the grant that amounts to 12.8 percent of the total investment, the chipmaker also committed to buy 60bn shekels ($16.6bn) worth of goods and services from Israeli suppliers over the next decade, while the new facility is expected to create several thousand jobs.

Intel already employs nearly 11,700 people in Israel, establishing a presence there in 1974. It is now one of around 500 multinationals in Israel, operating four development and production sites, including its manufacturing plant in Kiryat Gat called Fab 28 that produces Intel 7 technology, or 10 nanometer chips.

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