Israel To Plow $3.2B Into $25B Intel Fab Project

The government of Israel has agreed to contribute $3.2 billion in grants to support the construction of a $25 billion fab at Intel's Kiryat Gat site in the country.

As reported earlier by Reuters, the factory, set for operation in 2028, marks the chipmaker's largest investment in the region to date. Kiryat Gat is a city in southern Israel, and is about 12 miles from the Gaza border.

"The 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 US," Intel said in a statement to The Register today.

The investment, first teased by Israeli Prime Minister Benjamin Netanyahu in June, is only the latest in a string of high-profile fab projects announced by Intel since CEO Pat Gelsinger's return to the company in 2021.

Intel has recently announced new factories in Arizona, Ohio, and Germany with plans to modernize and expand production at its New Mexico, Oregon, and Ireland operations. To date, Intel has committed to more than a $100 billion worth of infrastructure projects to better compete against rival foundry operators TSMC and Samsung.

Intel's decision to build in Israel is not surprising despite the country's ongoing conflict with Hamas. The American giant has been operating in Israel for nearly 50 years with 11,700 employees — about 10 percent of its global workforce — working at sites in Haifa, Petah Tikvah, Jerusalem, and Kiryat Gat. Intel also has a history of acquiring Israeli tech startups — two of the biggest in recent memory being Mobileye and Habana Labs.

The x86 giant's new fab in Kiryat Gat, where Intel already produces chips on its Intel 7 (10nm) process node, is expected to boost headcount by several thousand when it comes online in 2028. However, it's not quite clear what process technology the chipmaker is targeting with the plant. We think it's safe to assume it'll be sub-Intel 7.

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Construction at the site is said to have already begun and, according to Reuters, comes at the expense of a higher corporate tax rate of 7.5 percent in Israel. That's up from the five percent rate Intel had previously paid, but still well below the standard 23 percent rate.

The higher tax rate was a condition of the larger grant sum and was the result of months of negotiations, Ofir Yosefi, the deputy director general of Israel's Investments Authority, told the newswire.

The announcement comes less than a year after Intel abandoned its plans to build a luxury research and development complex in Haifa. The $200 million facility was to include numerous creature comforts such as outdoor sports, green areas, pop-up restaurants, and a rooftop health center and spa. The project was canned to prioritize the chipmaker's Intel Foundry Services push, and will live on as a parking lot. ®