Israel Allocates $3.2 Billion to Intel for Construction of $25 Billion Chip Plant

 Israel's government has approved a $3.2 billion grant to Intel Corp for the construction of a new $25 billion chip plant in southern Israel, as confirmed by both parties. This development arrives amidst Israel's ongoing conflict in the Gaza Strip, resulting in casualties and increased international pressure for boycotts against Israel and companies profiting from its occupation of Palestinian territories.

Israel's agreement with Intel marks a significant demonstration of support from a major US corporation and a generous offer from the Israeli government. This collaboration occurs amid heightened pressure from Washington, Israel's primary supporter, urging Tel Aviv to take measures to reduce civilian casualties in Gaza.

The deal includes a substantial grant of 12.8% of the total investment, along with Intel's commitment to purchasing $16.6 billion worth of goods and services from Israeli suppliers over the next ten years. Furthermore, the new chip facility is anticipated to generate several thousand employment opportunities.

Israeli Prime Minister Benjamin Netanyahu publicly announced the deal in June, emphasizing its unprecedented nature and describing it as the largest investment ever made in the State of Israel. Intel, which operates four development and production sites in Israel, including a manufacturing plant in Kiryat Gat located 42 kilometers (26 miles) from the Gaza Strip, had not confirmed the news until now.

The expansion plan for the Kiryat Gat site is a pivotal aspect of Intel's strategy to strengthen a more resilient global supply chain. This expansion complements the company's ongoing and planned manufacturing investments in Europe and the United States, as highlighted in Intel's statement.

The Kiryat Gat plant specializes in producing Intel 7 technology, specifically 10-nanometer chips, and directly employs nearly 12,000 individuals in the country, while indirectly supporting an additional 42,000 jobs.

Israel's finance and economy ministries have highlighted that Intel's investment, particularly during this period amid global competition to attract major investments in chip technology, serves as a substantial vote of confidence in the country's economy.

They emphasized that this investment by Intel holds significant fiscal advantages for Israel that are expected to far exceed the monetary value of the state's grant provided to facilitate the project.

Israeli Finance Minister Bezalel Smotrich remarked, "This investment, occurring during Israel's battle against extreme malevolence, a battle where good must triumph over evil, signifies an investment in the principles of righteousness and progress for humanity."

Intel initially established its presence in Israel in 1974. With exports totaling around $9 billion, Intel's contributions account for 5.5 percent of the overall high-tech exports in the country.

Although Intel is among approximately 500 multinational companies operating in Israel and acquired the Israeli self-driving auto technologies firm Mobileye for $15.3 billion in 2017, the company declined to disclose the specific technology to be manufactured at the new Fab 38 plant. Intel has mentioned that construction for the plant, named Fab 38, is already underway.

The Fab 38 plant is scheduled to commence operations in 2028 and continue running until 2035.

CEO Pat Gelsinger has led Intel's initiative to invest billions in constructing factories across three continents, aiming to reclaim the company's leadership in chip manufacturing and enhance its competitiveness against rivals such as AMD, Nvidia, and Samsung. This new Israeli plant represents the most recent investment made by the chipmaker in its ongoing efforts in recent years.