The $3.2bn grant from the Israeli government is said to be the largest investment ever by a company in the country and will support the semiconductor company’s new chip manufacturing plant in Kiryat Gat, Israel


Intel headquarters in Santa Clara, California. (Credit: Coolcaesar/Wikipedia)

US-based semiconductors company Intel is set to secure a $3.2bn grant from the Israeli government for the planned construction of a new chip manufacturing facility in southern Israel.

The grant is said to be the largest investment ever by a company in Israel and comes at a time when Israel is engaged in war with the Palestinian militant group Hamas.

In 2019, Intel held talks with Israel for around $10bn investment to expand its chip manufacturing plant in Kiryat Gat, which was reiterated in 2021.

In June this year, Israeli Prime Minister Benjamin Netanyahu announced that Intel would build a new chip manufacturing plant in Israel, entailing a $25bn total investment.

The new chip manufacturing facility is expected to create several thousands of jobs.

In addition to the grant, the chipmaker is committed to purchasing goods and services worth $16.6bn from Israeli suppliers over the next decade.

Intel, in a statement, said: “The expansion plan for its Kiryat Gat site where it has an existing chip plant that is 42km from Hamas-controlled Gaza 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 United States.”

Intel vice president Daniel Benatar said: “Support from the Israeli government will ensure that Israel remains a global centre of semiconductor technology and talent.”

Israel Finance Minister Bezalel Smotrich said: “This investment, at a time when Israel wages war against utter wickedness, a war in which good must defeat evil, is an investment in the right and righteous values that spell progress for humanity.”

Intel has invested billions of dollars in building factories across three continents to restore its position in chip-making and better compete with rivals AMD, Nvidia and Samsung.

The company previously received around $2bn in the last 50 years in grants for other facilities.

In Germany, Intel plans to invest more than €30bn to develop two chip-making plants in Magdeburg, as part of its investment drive across Europe to build chip capacity.

Last year, the company announced up to $100bn investment to build the world’s largest chip-making complex in Ohio, while its rivals Samsung and TSMC also announced plans in the US.

Israel’s Investments Authority deputy director general Ofir Yosefi said: “Intel chose a higher grant and tax rate over an offer for a lower grant and lower tax rate.

“The process took months since a grant of such magnitude needed a review and independent analysis that it was economically viable. It was determined Israel would reap much higher fiscal and economic benefits.”