Intel has reached an agreement “in principle” to invest roughly $25bn in a new chipmaking factory in Israel, as announced by Prime Minister Benjamin Netanyahu on Sunday.
The US semiconductor giant stated that it had “submitted a business plan to upgrade its manufacturing facilities in Israel,” where it has been operating since 1974, but declined to disclose specific details about the project.
In a statement, Intel said, “Our intention to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs. We appreciate the continued support of the Israeli government.”
This upgrade is part of Intel’s strategic plan to invest in various chip plant facilities worldwide, particularly in light of tensions between the US and China over Taiwan’s dominance in the high-end global chip market.
Aside from the new factory in Israel, Intel is also in discussions with Germany for a €20bn plant in Magdeburg and recently announced plans to construct a $4.6bn semiconductor assembly and testing plant in Poland. Negotiations for a plant in Italy are also underway.
According to Netanyahu, the new factory in Kiryat Gat, which will be based at Intel’s existing facility, will mark the largest investment ever made in Israel.
In recent months, Israel has experienced social unrest due to the government’s contentious plans to reform the judiciary system. As a result, the country’s tech sector, including leaders in the industry, has been actively voicing their criticism in the ongoing protests.
Last month, the head of Israel’s central bank cautioned that the judiciary overhaul had caused a significant domestic shock to the country’s economy. Additionally, the Israel Innovation Authority reported an increase in the number of Israeli start-ups registering abroad rather than in Israel.
Netanyahu, however, consistently downplays concerns about the economic repercussions of the judicial overhaul. On Sunday, he touted Intel’s planned investment as “an expression of great confidence in the Israeli economy,” highlighting the strength of the nation’s free and technological economy.
The Israeli finance ministry expects the project to generate employment opportunities for thousands of new workers. As part of the agreement, Intel will also pay a local tax rate of 7.5%, an increase from its current rate of 5%.
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