Today: February 7, 2025
Prime Minister Benjamin Netanyahu said on Sunday, calling the deal the most significant international investment in the country, U.S. chipmaker Intel Corp (INTC.O) will spend $25 billion on a new factory in Israel. The factory in Kiryat Gat is due to open in 2027, to operate through 2035 at least, and to employ thousands of people, Israel’s Finance Ministry said. Under the deal, Intel will pay a 7.5% tax rate, up from the current 5%, the ministry added.
The plant will focus on wafer fabrication, a significant silicon manufacturing process. It’s part of an effort by Intel chief executive Pat Gelsinger to boost production outside Asia, where Intel and its competitors rely on a network of factories to supply their products.
Israeli companies are increasingly tapping into the global supply chain to diversify their production bases, as US-China trade tensions have prompted some chipmakers to seek alternatives to Asian manufacturers. The Israeli government offers significant grants to companies that build plants in the country.
“The new investments by Intel are a huge and significant boost to the economy, particularly in the southern region,” Yogev Gordus, head of budgets at the ministry, said in televised remarks. “They will generate direct fiscal benefits that far exceed the sum of the grants.”
The company said the project would add to its existing research and development facilities in Haifa, Jerusalem, Yakum, and Petah Tikva and its production site in Kiryat Gat, which employs some 12,000 workers. It also operates R&D centers in China, India, and Ireland. In 2017, Intel bought the Israel-based Mobileye Global Inc, which develops and deploys advanced driver-assistance systems, for $15 billion. It took the firm public last year.
The new investment will be subject to government approvals, which are expected in a few weeks. The company will receive a grant equivalent to 12.8% of its investment under Israel’s Encouragement of Capital Investment Law, the ministry said. In addition, the Ministry of Finance expects to provide tax benefits exceeding $2.5 billion, including tax deductions and accelerated depreciation. The ministry added that it weighed many economic considerations during the negotiations with Intel to maximize value for the Israeli public. The company is required to sign an agreement to qualify for the benefits. The government is also working with the European Union on possible additional economic benefits for the project.
The project is a significant victory for the ministry, which has been trying to lure technology and chip manufacturing companies in recent years. As the global economy slows, it has struggled to compete significantly with other countries for investment. The ministry has also sought to bolster its profile among politicians, whose support is critical for winning lucrative deals with foreign investors. Its new website focuses on the country’s high-tech industry and offers tips to entrepreneurs.
Nicole Kenny is a freelance writer and content creator with a passion for storytelling. Her work has been published in various online and print publications, covering topics ranging from travel and culture to ersonal finance and entrepreneurship. When she's not writing, you can find her hiking in the mountains or curled up with a good book. Nicole is also an avid traveler and amateur photographer.