Intel, one of the world's leading technology companies, is set to receive a significant boost in its operations in Israel. The Israeli government has agreed to grant Intel a whopping $3.2 billion to support the construction of a new $25 billion chip plant in southern Israel. This investment marks the largest ever made by a company in Israel and demonstrates a strong show of support by a major U.S. company.
The announcement comes amidst ongoing conflicts between Israel and Palestinian militant group Hamas, with tensions escalating in recent months. Despite the challenging circumstances, Intel has expressed its commitment to investing in Israel. The new chip plant will be located in Kiryat Gat, just 42 km away from the Hamas-controlled Gaza strip. The expansion of the Kiryat Gat site is part of Intel's broader strategy to strengthen its global supply chain, with planned manufacturing investments in the United States and Europe.
Intel's decision to invest heavily in Israel reflects its ambitions to regain dominance in the chip-making industry. Under the leadership of CEO Pat Gelsinger, the company has already invested billions in building manufacturing facilities across three continents, aiming to compete more effectively with rivals such as AMD, Nvidia, and Samsung. The new Israeli plant is the latest addition to Intel's series of recent investments in various locations.
The support from the Israeli government not only provides Intel with a significant financial grant but also ensures that Israel remains a key global hub for semiconductor technology. Intel Vice President Daniel Benatar expressed gratitude for the government's support, emphasizing the importance of Israeli talent and technology in the semiconductor industry.
The decision to grant Intel the $3.2 billion comes after a lengthy process involving reviews and independent analyses to determine the economic viability of such an investment. By providing this grant, Israel aims to reap substantial fiscal and economic benefits. Additionally, Intel has committed to purchasing $16.6 billion worth of goods and services from Israeli suppliers over the next decade, further boosting the local economy.
In exchange for the generous grant, Intel has agreed to pay a corporate tax rate of 7.5% instead of the usual 23%. This tax reduction is possible due to Israel's efforts to encourage investment in development areas by offering significant benefits to companies. The investment from Intel is expected to create several thousand jobs in the region.
Intel's presence in Israel dates back to 1974, and it currently operates four development and production sites in the country. The Kiryat Gat manufacturing plant, known as Fab 28, produces Intel 7 technology and employs nearly 12,000 people directly, while indirectly supporting another 42,000 jobs. Intel's exports from Israel stand at approximately $9 billion, contributing 5.5% to the country's total high-tech exports.
Notably, Intel's previous acquisition of Israeli self-driving auto technology company Mobileye for $15.3 billion in 2017 has further solidified its footprint in the country. While Intel has not disclosed the specific technology that will be produced at the new Fab 38 plant, which is already under construction, the investment represents a long-term commitment to Israel's technological advancement.
Prime Minister Benjamin Netanyahu had previously announced in June that Intel would invest $25 billion in a new chip plant in Israel. With the confirmation of this massive grant, Intel is well on its way to realizing its ambitious plans. The Fab 38 plant is expected to begin operations in 2028 and continue through 2035.