Israel’s government has agreed to provide Intel with a $3.2 billion grant for the construction of a new $25 billion chip plant in southern Israel. The new plant, known as Fab 38, is expected to open in 2028 and operate through 2035.
Key Points
- The grant covers about 12.8% of the total investment in the facility in Kiryat Gat.
- Intel will buy 60 billion shekels ($16.6 billion) in goods and services from Israeli companies, and the new facility is expected to create several thousand jobs.
- This is a $15 billion extension to the investment in a new facility that Intel announced in 2019.
Background
Intel has a long history in Israel, having established a presence in the country in 1974. The company currently operates four development and production sites in Israel, including its manufacturing plant in Kiryat Gat called Fab 28, which produces Intel 7 technology or 10-nanometer chips and employs nearly 12,000 people in the country, while indirectly employing another 42,000 more. In June, Prime Minister Benjamin Netanyahu announced that Intel would build a new $25 billion chip plant in Israel.
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Benefits for Israel & Intel
The new Israeli plant is expected to pay a corporate tax rate of 7.5%, instead of the normal 23% rate, under Israel’s law to encourage investment in development areas. This reduced tax rate is intended to attract more businesses to invest in Israel and create jobs for its citizens. Additionally, Intel’s commitment to invest in Israel demonstrates the country’s ability to attract significant foreign investment, even amid ongoing geopolitical tensions.
The $3.2 billion grant from the Israeli government will help Intel advance its unprecedented expansion of chip production capacity. This investment comes at a time when the global semiconductor market is experiencing significant growth. The demand for advanced semiconductor technologies is also increasing. By investing in a new facility in Israel, Intel aims to capitalize on this growth. It also aims to maintain its position as a leading semiconductor manufacturer.
Conclusion
The $3.2 billion grant from the Israeli government to Intel is for the construction of a $25 billion chip plant. The plant will be in southern Israel and it represents a significant investment in the country’s semiconductor industry. This investment is also expected to create thousands of jobs and contribute to the local economy. It will also strengthen Israel’s position as a global centre of semiconductor technology and talent.