Intel to Construct Largest-Ever $25 Billion Chip Manufacturing Plant in Israel

The Israeli government announced on Tuesday that Intel has officially committed to constructing a $25 billion chipmaking facility in the southern region of the country. Prime Minister Benjamin Netanyahu hailed this investment as the largest in Israel's history. With an existing workforce of 11,700 employees, the American tech company has already injected over $50 billion into the Israeli economy over the past five decades.

Reuters has reported that despite the October 7 attacks and the ongoing war between Israel and Hamas, Intel is determined to expand its current chipmaking factory in Kiryat Gat, located about 16 miles northeast of Gaza. Israel's finance minister, Bezalel Smotrich, announced on Tuesday that Intel has approved a significant investment of $25 billion to establish a new factory in Israel.

He added that this investment will create high-quality job opportunities and increase productivity in remote areas, making a significant contribution to the Israeli economy's growth. This announcement comes after Netanyahu initially revealed the new factory in June, hailing it as the largest investment ever made by an international company in Israel.

Intel (INTC) did not confirm the new investment at the time, but emphasized the importance of its Israel operations and the commitment to meeting future manufacturing needs. According to Reuters, the company has since confirmed the investment plans on Tuesday, but has not responded to CNN's request for comment.

Intel is making significant investments to regain its position as the top player in the semiconductor industry and to enhance supply chain resilience amidst growing geopolitical tensions. In 2022, the company announced a $20 billion investment for the construction of two new chipmaking facilities in the US and up to $90 billion for new factories in Europe. Additionally, the Israeli government is reportedly providing a $3.2 billion grant for the expansion of the Kiryat Gat plant over several years.

Intel has pledged to purchase 60 billion shekels ($16.6 billion) in goods and services from Israeli suppliers over the next ten years, according to a statement from the company reported by Reuters.

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Construction had already begun to prepare for the site expansion, with a large portion of the buildings already completed, according to the news agency.

The new plant is set to open in 2028 and operate until 2035.

Kiryat Gat, Intels most advanced manufacturing facility, is one of the company's four development and production sites in Israel. In addition, Intel acquired the Israeli driver-assist technology startup Mobileye for $15.3 billion in 2017, and later took it public just over a year ago.

In February 2022, plans were announced to acquire Israeli chipmaker Tower Semiconductor for $5.4 billion. However, the deal fell through earlier this year due to a lack of necessary regulatory approvals, with reports suggesting that China's antitrust regulator was the cause of the collapse.

Hagi Cohen-Boland contributed to the writing of this article.