Amazon Web Services & Intel to Invest Billions in Israel for Cloud Computing & Expansion of Chip Manufacturing Facilities

Edited by: Fern Sidman

Amazon Web Services (AWS) on Tuesday announced a $7.2 billion investment in Israel and the creation of a new service region in the country for cloud computing.

According to AWS, the investment will run through 2037, generating nearly $14 billion in additional GDP growth and will support 7,700 jobs. The Algemeiner reported that the new AWS “region” means that Israeli public and private sector AWS customers will have access to three AWS data centers to run applications and store data. The announcement follows Amazon’s $1.2 billion ‘Project Nimbus’ contract with the Israeli government in 2021 to move ministerial services to the cloud.

As was reported by Business Wire, starting Tuesday, developers, startups, entrepreneurs, and enterprises, as well as government, education, and nonprofit organizations, have an even greater choice for running their applications and serving end users from data centers located in Israel, using advanced AWS technologies to drive innovation.

“The launch of the AWS Region in Israel provides customers with the ability to build the most advanced cloud technology-based applications and achieve the highest levels of security, availability, and resilience,” said Prasad Kalyanaraman, vice president of Infrastructure Services at AWS. “Israel’s strategy to promote technology innovation, along with its abundance of talent, has created a thriving global hub for entrepreneurs, e-governments, and multinational businesses. Cloud technology is at the heart of any digital transformation program, and AWS is proud to support Israel’s efforts to enhance citizen services for many years to come.”

In 2021, the government of Israel announced its selection of AWS as its primary cloud provider as part of the Nimbus contract for government ministries and subsidiaries. The Nimbus framework provides cloud services to Israeli government ministries—including local municipalities, government-owned companies, and public sector organizations—with the aim of driving innovation and enabling new digital services for the citizens of Israel.

The Algemeiner reported on Friday that the Amazon Labor Union (ALU), which represents more than 8,000 workers at Amazon’s JFK8 facility in Staten Island, New York, was a co-organizer of a protest calling for Amazon to boycott Israel over the Project Nimbus contract.

“We are here today to fight back, and everyone should have their chance to say that Amazon needs to be held accountable, Google needs to be held accountable, and the Israeli government should be held accountable for all charges and crimes,” ALU co-founder Jordan Flowers said at the rally, as was reported by the Algemeiner.

“We are excited to welcome the new AWS Region to Israel as part of project Nimbus and we congratulate AWS for its commitment and hard work in building the Israeli Region,” said Yali Rothenberg, accountant general of Israel. “The establishment of the Israeli Region reflects the long-term commitment of AWS to Israel and to the continuation of their large investments in the Israeli market. The establishment of the Region will enable us to migrate substantial governmental workloads to the cloud, and we are confident that it will help us accelerate digital transformation in the public sector, leverage technology to drive innovation in the government, improve customer experience, and further the development of the technological ecosystem in Israel.”

The launch of the AWS Israel (Tel Aviv) Region enables customers to securely store data in Israel while providing customers with even lower latency across the country to drive greater productivity, more efficient business operations, and enhanced real-time application performance. Customers also have access to advanced AWS technologies to accelerate innovation, including compute, storage, networking, business applications, developer tools, data analytics, security, machine learning, and artificial intelligence (AI).

AWS released an economic impact study estimating the company’s projected spend on the construction and operation of the new AWS Region, which will support an average of more than 7,700 full-time equivalent jobs at external businesses annually, with a planned $7.2 billion (approx. ILS 26.6 billion) investment in Israel through 2037. The construction and operation of the AWS Israel (Tel Aviv) Region is also estimated to add approximately $13.9 billion (ILS 51.7 billion) to Israel’s gross domestic product (GDP) through 2037.

Israeli organizations are among the millions of active customers using AWS in more than 190 countries around the world. Large and small enterprises in Israel choose AWS to innovate, drive cost efficiencies, and accelerate time to market. Customers in Israel using AWS include Amdocs, Bank Hapoalim, Bank Leumi, Harel Insurance, ICL Group, Ituran, Migdal, Netafim, Paz, Phoenix, and Tnuva. Public sector organizations that use AWS to transform the services delivered to Israeli citizens include Ayalon Highway, Government of Israel, Ministry of Finance, Ministry of Health, Ministry of Transport and Road Safety, Tel Aviv Sourasky Medical Center, the Consumer Protection and Fair Trade Authority, and Weizmann Institute. Israeli startups, including Aidoc, AI21 Labs, AppsFlyer, Armis, CyberArk, Gong, Jfrog, Logz.io, Monday.com, SentinelOne, TytoCare, Wix, and Wiz, are building their businesses with the use of AWS to rapidly scale nationally and around the world.

Founded in 1921, Bank Hapoalim is one of the largest financial institutions in Israel and offers a broad range of banking and financial services to millions of customers in the country. “AWS enables us to speed up innovation and quickly bring new products and capabilities—such as our FinTech Zone business platform—to market,” said Eti Ben-Zeev, head of Information Technology, chief information officer, and deputy CEO at Bank Hapoalim. “FinTech Zone makes it possible for fintech startups to work together with the bank efficiently and securely, leveraging the benefits of AWS to bring new offerings to the market faster. The new AWS Region will make it easier for us to offer innovative solutions to our customers while continuing to accelerate our digital transformation and meet the strictest regulatory requirements.”

The Ministry of Transport and Road Safety is responsible for the planning, development, and regulation of infrastructure and integrated transport systems in Israel. “Public Transportation has moved to AWS to increase efficiencies in the collection, management, research, and processing of public transportation data in Israel,” said Ortal Niv, chief information officer at the Ministry of Transportation and Road Safety. “We use AI services to accelerate information processing, provide accurate prediction of transportation needs, improve traffic management capabilities, and help reduce traffic jams. The new AWS Region will also allow us to securely deploy new applications, increase efficiencies, improve performance, and meet data residency requirements.”

Cloud security leader Wiz is a pioneer in the rising Cloud-Native Application Protection Platform (CNAPP) security market. “Our customers, which include 35% of the Fortune 500, rely on Wiz to help create secure cloud environments that accelerate their business by scanning 230 billion files daily on five million protected cloud workloads,” said Roy Reznik, co-founder and vice president of Research and Development at Wiz. “Building on AWS has helped our business scale during hyper growth and allowed us to maintain high levels of service to our customers, regardless of their location. The new AWS Region in Israel will allow us to replicate our development environments locally, delivering faster product iterations and reducing time to market, and now, we will be able to offer our solutions to local data-sensitive customers, enabling them to consolidate their cloud security programs to a single platform.”

Speaking from the Israeli military’s Central Command in the wake of a terrorist attack in Maale Adumin on Tuesday, Israeli Prime Minister Benjamin Netanyahu welcomed the announcement from Amazon Web Services.

“I would like to tell you that not only is the IDF strong but so is the economy. We were told today that Amazon is investing $7.2 billion in the Israeli economy; this is after we were told that Intel intends to invest $25 billion and that NVIDIA is building a supercomputer here,” Netanyahu said, as was reported by The Algemeiner. “Indeed, the IDF is strong, as is the Israeli economy. Israeli society and democracy are coming out strengthened. I would like to tell you that I am working around the clock, together with others, on the solution.”

In other Israeli investment news, it was reported early in July that Intel Corp.’s plans for a significant investment in Israel have left the country eagerly anticipating the expansion of its chip manufacturing facilities, as was reported by the Times of Israel. Despite the Israeli government’s announcement of an “unprecedented” $25 billion investment deal with Intel, the chipmaker has yet to confirm the specific details of the project, leaving many wondering about the extent of this venture.

In July, the TOI reported that the surprise announcement was made by the Finance Ministry and Prime Minister Benjamin Netanyahu, who revealed the agreement “in principle” to expand Intel’s chip plant in Kiryat Gat, located south of Tel Aviv. While Intel has confirmed its intention to upgrade the Kiryat Gat facility, it has refrained from disclosing further information about the project at this time, the TOI report indicated.

This is not the first time Intel has expressed interest in expanding its Kiryat Gat plant. In 2019, the company held talks for a $10 billion investment for the same purpose. The TOI report indicated that the recent announcement of an additional $15 billion commitment comes on the heels of Intel’s plans for substantial capital investments worldwide, including semiconductor fabs in Germany and a semiconductor assembly and test site in Poland.

The project aims to meet future manufacturing demands and align with Intel’s IDM 2.0 strategy, which emphasizes integrated device manufacturing.  As was reported by the TOI. Intel has expressed gratitude for the Israeli government’s ongoing support, recognizing Israel as a global center of technical talent and innovation.

According to the agreement announced in June, Intel will pay a higher tax rate of 7.5%, up from the current 5%, and in return, the chipmaker will receive a government grant equivalent to 12.8% of the investment amount, the TOI report said. The expanded Kiryat Gat facility is projected to open by 2027 and operate until at least 2035, generating thousands of well-paying jobs for the region.

Intel’s presence in Israel has been substantial, with 11,700 employees spread across three R&D centers and the manufacturing plant in Kiryat Gat, according to the TOI report in July. Moreover, the company indirectly supports approximately 42,000 workers in Israel, underscoring its significant impact on the country’s economy.

The chip giant has a history of acquisitions in Israel, including the purchase of Tower Semiconductor for $5.4 billion in 2021 and Mobileye, a self-driving technology company, for over $15 billion in 2017.

Intel Israel reported record exports of $8.7 billion in 2022, accounting for 1.75% of Israel’s entire GDP and 5.5% of its high-tech exports, according to the TOI. Additionally, the company’s corporate responsibility report indicates a 60% increase in purchases of goods and services from Israeli businesses, amounting to $3.5 billion in 2022.

As the country eagerly awaits further details of Intel’s ambitious investment plans, it remains confident that the chipmaker’s expansion in Kiryat Gat will cement Israel’s status as a global technology powerhouse and contribute significantly to its economic growth and innovation.