Silicon South: Intel’s $25 Billion Bet on Israel’s Chip Future
Intel has long maintained a development center in Israel, taking on a significant portion of technological research and development tasks. In early 2021, he initiated an expansion plan shortly after Pat Gelsinger assumed the role of Intel’s CEO. This included the construction of a sprawling new development center, IDC21, spanning thousands of square meters in Haifa’s Matam Science Park, not far from Intel’s existing facility, IDC9. However, at the beginning of this year, Intel canceled this project, which does not signify a slowdown in their local investment pace.
According to Reuters, Intel plans to construct a new semiconductor fabrication plant in Southern Israel, expected to commence operations in 2028 and continue until 2035. The investment totals an unprecedented $25 billion, marking the largest foreign investment in Israel’s history. Intel’s expansion aims to strengthen the global semiconductor supply chain, embodying a strategy of diversification and reducing dependency on a single region. The new plant, dubbed Fab 38, will be adjacent to Intel’s existing Fab 28 near Kiryat Gat, located approximately 42 kilometers from the Gaza Strip. Fab 28 employs Intel’s 7-nanometer process technology for chip production, and Fab 38 will probably utilize Intel’s advanced 18A process technology.
Under Israel’s investment incentive laws, Intel will also receive a subsidy amounting to 12.8% of the investment, approximately $3.25 billion. Additionally, Intel will benefit from a reduced corporate tax rate of 7.5%. Bolstered by substantial government subsidies, Intel aims to expand its production scale and reassert its market dominance over competitors like AMD and Nvidia.
It is understood that Intel currently employs around 12,000 staff in Israel, with an additional 2,000 employees at Mobileye. The new projects are expected to create several thousand job opportunities locally. Moreover, Intel has pledged to purchase goods and services worth approximately $16.6 billion from Israeli suppliers over the next decade.
