Israel’s government has agreed to provide Intel Corp with a $3.2bn grant to support the construction of a new $25bn chip manufacturing plant in southern Israel, marking what Prime Minister Benjamin Netanyahu calls the “largest investment ever” in the country.
This announcement comes as Israel continues its intense conflict with Gaza, which has resulted in the deaths of nearly 21,000 Palestinians since October 7. The situation has sparked global calls to boycott Israel and companies linked to its occupation of Palestinian territories.
Intel’s deal with Israel is seen as a significant display of support from a major US company, as well as a bold move by the Israeli government, especially given the pressure from Washington on Israel to reduce civilian casualties in Gaza. Along with the $3.2bn grant, Intel has agreed to purchase 60 billion shekels ($16.6bn) worth of goods and services from Israeli suppliers over the next decade. The project is also expected to create thousands of new jobs.
In June, Prime Minister Netanyahu announced the deal, which Intel had not confirmed until now, calling it “unprecedented.” The Prime Minister added that this investment is “the largest ever in the State of Israel.”
Intel already operates four development and production sites in Israel, including a plant in Kiryat Gat, located just 42km (26 miles) from Gaza. The expansion of the Kiryat Gat site is part of Intel’s strategy to strengthen its global supply chain, alongside its investments in Europe and the United States. The plant currently produces Intel 7 technology, or 10-nanometer chips, and provides employment to nearly 12,000 people in Israel, with an additional 42,000 indirectly employed.
Plant to Open in 2028
The new plant, known as Fab 38, is set to open in 2028 and will continue operations through 2035. Israel’s finance and economy ministries have described Intel’s investment, especially in the current climate and amidst global competition in the chip industry, as a strong vote of confidence in Israel’s economy. They believe the economic benefits from this investment will far exceed the state’s grant.
Israeli Finance Minister Bezalel Smotrich framed the investment as a symbolic commitment to “righteous values” in the midst of the ongoing conflict, adding that it represents progress for humanity.
Intel first established a presence in Israel in 1974, and today, the company’s exports, valued at around $9bn, account for 5.5% of Israel’s total high-tech exports. The new plant is part of Intel’s broader strategy under CEO Pat Gelsinger to reclaim its leadership in chip manufacturing and compete more effectively with rivals such as AMD, Nvidia, and Samsung.
