In a landmark move, Israel’s government has approved a USD 3.2 billion grant for Intel Corp’s new USD 25 billion chip plant to be constructed in southern Israel. This investment marks the largest ever by a company in Israel and comes amid the backdrop of Israel’s ongoing conflict with the Palestinian group Hamas. Intel’s shares experienced a 1.9% increase in pre-market Nasdaq trading, signaling positive market sentiment.
Strategic expansion near Gaza
The expansion plan for Intel’s Kiryat Gat site, situated 42 km (26 miles) from Hamas-controlled Gaza, is a crucial element in Intel’s strategy to fortify its global supply chain. The initiative aligns with the company’s broader manufacturing investments in Europe and the United States, reinforcing Intel’s commitment to reclaiming dominance in chip-making.
Global investment drive
Under the leadership of CEO Pat Gelsinger, Intel has been actively investing in chip manufacturing facilities worldwide. The Israeli plant is part of Intel’s broader investment strategy, including plans to spend over 30 billion euros ($33 billion) on two chip-making plants in Magdeburg, Germany. The company’s global investment drive also involves a multi-billion-dollar chip-making complex in Ohio, demonstrating Intel’s determination to compete with industry rivals.
Confidence in Israel’s economy
Israel’s finance and economy ministries view Intel’s investment as a vote of confidence in the country’s economy, particularly given the intense global competition for significant chip-related investments. The grant, constituting 12.8% of the total investment, is expected to yield direct fiscal benefits for Israel that surpass the state’s contribution.
Social and economic impact
Finance Minister Bezalel Smotrich emphasized the investment’s positive alignment with righteous values, providing progress for humanity. Beyond the financial injection, Intel’s commitment includes purchasing USD 16.6 billion worth of goods and services from Israeli suppliers over the next decade, alongside the creation of several thousand jobs through the new facility.
Intel’s presence in Israel
Intel has maintained a presence in Israel since 1974, operating four development and production sites, including the Kiryat Gat manufacturing plant (Fab 28). The company’s exports, accounting for 5.5% of total high-tech exports, highlight its significant role in Israel’s technology landscape.
Future prospects
While the exact technology to be produced at the new Fab 38 plant remains undisclosed, its construction, reportedly already underway, signifies Intel’s long-term commitment to the region. Prime Minister Benjamin Netanyahu initially announced Intel’s plans in June, and the Fab 38 plant is anticipated to commence operations in 2028, operating through 2035.