Intel is pushing ahead with a $25 billion investment in Israel, giving a boost to the Middle Eastern nation as its invasion of Gaza begins to take a negative toll on its economy.
As part of the contract, Israel’s government will provide Intel with a $3.2 billion grant to expand the American tech manufacturer’s Kiryat Gat semiconductor manufacturing plant in southern Israel. Intel runs four development and production sites in Israel, including the aforementioned manufacturing plant in the southern Israeli city of Kiryat Gat, located just 26 miles to the northeast of the Gaza Strip.
Intel said in a statement that an expansion plan for the Kiryat Gat site is an “important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States.”
The plant manufactures Intel 7 technology, or 10-nanometer chips, and employs almost 12,000 people in the nation while indirectly employing 42,000 more.
Intel declared its decision to go ahead with the project, which is expected to be Israel’s biggest-ever investment by a company, as the nation continues with its assault on Gaza and as concerns grow about the economic toll this ongoing campaign is having.
Israel is known as a tech export powerhouse in the Middle East, and analysts have warned that leading tech companies may reconsider pouring more investments in Israel, if not in protest of Israel’s genocidal campaign in Gaza, then out of fear of the instability of the nation or the lack of a large talent pool for their factories.
Intel products make up 5% of Israeli high-tech exports
Calling Intel an important player in Israel’s high-tech economy would be an understatement. The company first set up shop in Israel in 1974, and its exports out of Israel now make up 5.5 percent of total high-tech exports worth around $9 billion.
Intel makes up one of about 500 multinational corporations in Israel. In 2017, the company deepened its connection with Tel Aviv when it purchased the Israeli self-driving auto technologies firm Mobileye for $15.3 billion and took over construction of the firm’s Fab 38 plant, which is expected to open in 2028 and run until at least 2035. Intel has declined to say what tech products will be manufactured in the plant.
The new Israeli plant is the newest investment by the chipmaker in the last few years and part of CEO Pat Gelsinger’s strategy of investing billions into constructing factories across the world in an attempt to restore the company’s dominance in chipmaking and better compete with rivals AMD, Nvidia and Samsung.
Immediately following the signing of the agreement with Israel, Intel’s share prices immediately shot up by around three percent.
Apart from the $3.2 billion grant, which amounts to 12.8 percent of Intel’s investment, the manufacturer has also committed to purchasing $16.6 billion worth of goods and services from Israeli suppliers over the next decade. The new Israeli factory is also expected to produce several thousand jobs.
Israeli Prime Minister Benjamin Netanyahu in June released news of the agreement which remained unconfirmed by Intel until now announcing the decision to construct a new chip plant as “unprecedented,” adding that “this is the largest investment ever in the State of Israel.”
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