Intel announces investment of US$25 billion to build factory

According to the Times of Israel, U.S. semiconductor giant Intel has signed an in-principle agreement with the Israeli government to invest $25 billion to build a chip manufacturing plant in Kiryat Gat.

Israeli Prime Minister Benjamin Netanyahu said Intel's investment was "unprecedented" in Israel and would be used to build a chip manufacturing plant using the most advanced technology in the world. In 2019, Intel has negotiated to invest approximately US$10 billion to build the Kiryat Gat chip factory.

"This is the largest investment ever made by the State of Israel," Netanyahu said at his weekly cabinet meeting on Sunday. “This expresses great confidence in the Israeli economy and reflects exactly the strength of the free economy we have built here, as well as the technological economy we have developed here.”

The announcement comes after Intel reached an agreement in principle with the Treasury Department on the investment plan. As part of the deal, Intel will pay a 7.5% tax rate, higher than the 5% the chipmaker currently pays to the state, the Treasury Department said in a statement. In addition, the two parties agreed that Intel will receive a government subsidy of 12.8% of the investment amount under the Encouraging Capital Investment Law (ECIL).

The Kiryat Gat factory is expected to open in 2027 and continue operating until at least 2035, employing thousands of workers at above-average wages, the ministry said.

"Intel's investment will bring significant economic benefits to the entire State of Israel, especially the southern region," said Budget Commissioner Yogev Gardos. "Negotiations with the company are... based on economic modeling to examine the benefits of the investment in order to maximize value for the Israeli public while promoting investment in Israel against the alternatives available to Intel globally."

Since entering Israel in 1974, Intel has invested more than $17 billion in Israel and employs 11,700 people at its three research and development centers in Haifa, Petah Tikva and Jerusalem, as well as its manufacturing plant in Kiryat Gat. Intel said it is currently responsible for creating indirect jobs for about 42,000 employees in Israel.

"Israel is a global center for technology talent and innovation and one of Intel's key global manufacturing and R&D centers," Intel said in a statement. “Our intention to expand manufacturing capabilities in Israel is driven by our commitment to meeting future manufacturing needs and supporting Intel’s IDM 2.0 strategy, and we appreciate the Israeli government’s continued support.”

Last year, Intel acquired Israeli computing technology startup Granulate for $650 million, marking the chipmaker's seventh acquisition of an Israeli company in just over five years.

The tech giant acquired Jerusalem-based self-driving technology maker Mobileye in 2017 for more than $15 billion, a deal that remains the largest exit by an Israeli company to date. Mobileye has become a core part of Intel's global business as it looks toward a future of fully autonomous vehicles.

Last week, Intel revealed that Intel Israel's exports reached a record $8.7 billion in 2022, accounting for 1.75% of Israel's entire GDP and 5.5% of all Israel's high-tech exports, according to the company's corporate responsibility report. In addition, Intel Israel purchased $3.5 billion in goods and services from Israeli companies, a 60% increase from $2.2 billion in 2021.