Intel to receive a $3.2 billion grant for a $25 billion chip plant in southern Israel

The Israeli government has approved a $3.2 billion grant for Intel’s ambitious plan to construct a $25 billion chip plant in southern Israel. This marks the largest-ever investment by a company in Israel. The announcement comes amid heightened tensions in the region, with Israel engaged in a conflict with the Palestinian militant group Hamas since the 7 October 2023, attack.

Intel, which already has around 10% of its global workforce in Israel, saw its shares rise by 2.73% to $49.28 on NASDAQ following the news. The expansion plan is set for the Kiryat Gat site, situated 42 km from Gaza, and is a key component of Intel’s strategy to strengthen its global supply chain. The company has been actively investing in manufacturing facilities in Europe and the United States.

Under the leadership of CEO Pat Gelsinger, Intel has allocated billions to build factories across three continents, aiming to regain its dominance in chip-making and compete effectively with rivals such as AMD, Nvidia, and Samsung. Intel’s Vice President, Daniel Benatar, emphasized that the Israeli government’s support ensures the country remains a global hub for semiconductor technology and talent.

The grant, along with a commitment to buy $16.6 billion worth of goods and services from Israeli suppliers over the next decade, is anticipated to create several thousand jobs. The company will also pay a corporate tax of 7.5%, up from the previous 5%, over the five-year investment period.

Ofir Yosefi, Deputy Director General of Israel’s Investments Authority, explained that the decision to offer a higher grant and tax rate was based on a thorough review, ensuring economic viability and maximizing fiscal and economic benefits for Israel.

Finance Minister of Israel Bezalel Smotrich highlighted the significance of this investment during a challenging time, describing it as a contribution to the values of progress for humanity.

Intel’s commitment to Israel dates back 50 years, during which it received approximately $2 billion in grants for other facilities. The new chip plant, known as Fab 38, is set to open in 2028 and operate through 2035. While Intel did not disclose the specific technology to be produced at Fab 38, the company stated that construction is already underway.

This major investment by Intel reflects a vote of confidence in Israel’s technological capabilities and economic potential, further solidifying the country’s position in the global semiconductor industry.