Netanyahu: Intel to Invest $25B in New Chip Manufacturing Plant in Kiryat Gat

Netanyahu: Intel to Invest $25B in New Chip Manufacturing Plant in Kiryat Gat

Edited by: TJVNews.com

Intel Corp., the American semiconductor giant, has reached an agreement in principle with the Israeli government to construct a chip manufacturing plant in Kiryat Gat, representing a groundbreaking investment of $25 billion. The Times of Israel reported that Israeli Prime Minister Benjamin Netanyahu hailed the deal as “unprecedented” and emphasized that the plant would utilize the most advanced technology available.

“This is the largest investment ever in the State of Israel,” Netanyahu said at the weekly cabinet meeting on Sunday, the TOI reported. “This is an expression of great confidence in the Israeli economy and exactly reflects the strength of the free economy that we have built here, and the technological economy that we are developing here,” he added.

This is not the first time Intel has shown interest in investing in the Kiryat Gat chip plant. In 2019, the company engaged in talks for a $10 billion investment for the same purpose. However, this recent agreement surpasses all previous records for foreign investments in Israel, as stated by Netanyahu during a cabinet meeting. The TOI also reported that he characterized the investment as a testament to the strength of Israel’s free economy and technological prowess.

The announcement came after Intel and the Israeli Finance Ministry reached an agreement on the investment plans. According to the TOI report, under this agreement, Intel’s tax rate will increase from the current 5% to 7.5%, and the company will receive a government grant of 12.8% of the total investment amount through the Encouragement of Capital Investment Law (ECIL). These terms ensure that the Israeli economy reaps substantial benefits from the investment.

The construction of the Kiryat Gat factory is anticipated to be completed by 2027, with operations continuing until at least 2035. As was reported by TOI, the plant is expected to employ thousands of workers who will enjoy higher-than-average wages, providing a significant boost to the local economy, according to the Ministry of Finance.

Yogev Gardos, the Budget Commissioner, stated that the negotiations with Intel were based on economic models designed to assess the investment’s advantages and maximize value for the Israeli public. The deal aims to encourage investment in Israel by presenting Intel with an appealing alternative to other global options.

“Intel’s investment will yield significant economic benefits to the State of Israel in general and to the southern region in particular,” said Budget Commissioner Yogev Gardos, according to the TOI report. “The negotiations with the company were… based on economic models to examine the benefits of the investment, in order to maximize value for the Israeli public while promoting investment in Israel against the alternative options available to Intel globally,” Gardos added.

Intel’s involvement in Israel dates back to 1974, and it has invested more than $17 billion in the country. The TOI report indicated that currently, the company employs 11,700 people across its three research and development centers in Haifa, Petah Tikva, and Jerusalem, as well as at its manufacturing plant in Kiryat Gat. In addition, Intel indirectly supports approximately 42,000 workers in Israel. The TOI also that  the company’s statement emphasized Israel’s status as a global hub of technical talent and innovation, noting that the expansion of manufacturing capacity in the country aligns with its IDM 2.0 strategy.

This investment is the latest in a series of Intel’s acquisitions of Israeli companies. As was reported by the TOI, in 2017, the company purchased Mobileye, a Jerusalem-based self-driving technology firm, for over $15 billion, marking the largest exit by an Israeli company to date. Intel’s commitment to Israel’s technological landscape is evident in its continued acquisition of local startups. The report indicated that last year, Intel acquired computing tech startup Granulate for $650 million, marking its seventh acquisition of an Israeli company in just over five years.

The significance of Intel’s presence in Israel is underscored by the company’s impressive economic contributions. The TOI reported that in 2022, Intel Israel recorded record exports of $8.7 billion, accounting for 1.75% of Israel’s entire GDP and 5.5% of the country’s high-tech exports. Additionally, the company purchased $3.5 billion in goods and services from Israeli businesses, representing a 60% increase from the previous year.

Intel’s decision to establish a chip manufacturing plant in Kiryat Gat reinforces Israel’s position as a leading global player in the technology industry, as was noted in the TOI report. The investment not only bolsters the country’s economy but also serves as a testament to the talent and innovation fostered within Israel’s borders. With the plant set to employ thousands of workers and leverage cutting-edge technology, it is poised to contribute significantly to Israel’s ongoing technological development and economic growth, according to the TOI report.