Intel to invest another $25 billion In Israel

Plans expanded fabs in boost to beleaguered PM and blow to protestors

Israel's prime minister Binyamin Netanyahu announced on Sunday that Intel will invest $25 billion on semiconductor manufacturing facilities in the country.

"I congratulate a tremendous achievement for the Israeli economy – NIS90 billion – the largest investment by an international company ever in Israel!" wrote the PM in a Telegram post. The sum of 90 billion New Shekels is roughly equivalent to $25 billion.

To be located in the town of Kiryat Gat, the factory is slated to open in 2027 and operate through at least 2035, according to Israel's finance ministry. Intel will pay an enhanced tax rate of 7.5 percent – up from 5 percent – but also receive a grant worth 12.8 percent of the total investment on the condition Chipzilla's commitments are upheld.

Intel's presence in Israel began in 1974, and the chipmaker has since grown into one of the country's largest private sector employers and exporters. Around 12,000 of its global 120,000 employees are located in Israel across presences in Haifa, Jerusalem, Petach Tikva, and Kiryat Gat. Its $8.7 billion worth of Israeli exports account for 1.75 percent of the country's gross domestic product, according to Intel.

Chipzilla's website states its two main Israel-based activities are development and manufacturing. It refers to its Kiryat Gat fab as its "most advanced manufacturing facility."

An Intel spokesperson told The Reg: "Israel is a global center of technical talent and innovation and one of Intel's significant global manufacturing and R&D centers."

"Since its establishment in 1974, Intel Israel has played a crucial role in Intel's global success. Our intention to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs and supporting Intel's IDM 2.0 strategy, and we appreciate the continued support of the Israeli government."

We asked Intel what it plans in the new facilities, but it didn't respond. However, the Alibaba-owned South China Morning Post (SCMP) reported the new investment will be for "wafer fabrication."

Kiryat Gat's existing Fab 28 plant produces 7nm process chips. Fab 38 is slated to open in the city in 2024, and to produce chips using EUV lithography.

According to both SCMP and the Wall Street Journal, the $25 billion investment includes $10 billion already announced in 2021 for the already under construction Fab 38.

PM Netanyahu characterized the investment as an expression of confidence in Israel's economy in "stark contrast to all the false reports against [Israel]."

The expansion further helps diversify semiconductor production, but it comes at a time when many are concerned about investing in Israel. The country has experienced protests since a Netanyahu-led bill in January proposed completely overhauling the existing independent judiciary and allowing the government to itself appoint at least two of the country's Supreme Court judges and the government to have substantial sway over the remaining judiciary. Tech leaders have been prominent in that protest movement and suggested the judicial overhaul – which they argue will make judges less independent of government – could deter tech investors. With $25 billion on the way from Intel, that argument looks weaker.

Israel also faces concern and backlash over human rights issues such as a recently announced plan to allow expanded settlements to be built in the West Bank.

Alongside the news of Intel's expanded investment, Netanyahu announced development of the Gaza Marine gas field off the area's coast.

Which may explain how Intel will power its new fabs. ®

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