Intel postpones Israeli chip factory
25 billion dollars have been budgeted for an Intel factory in Kiryat Gat. But now Intel is canceling the construction contracts.
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(Image: Maksim Shmeljov/Shutterstock.com)
Intel wanted to start producing computer chips in Israel in 2027. This schedule is unlikely to hold. Intel has canceled the contracts for the purchase of building materials and equipment for the chip factory, as reported by the Israeli business newspaper Calcalist. In addition, senior employees have moved to the USA. The Ministry of Finance, which is funding the 25 billion US dollar project with 3.2 billion dollars, has also been informed.
It is therefore also unclear whether the 50 percent tax increase for Intel in Israel, which was agreed in return for the subsidies, will take effect. In addition, the power plant that OPC Energy was to build to supply the chip factory in the Israeli town of Kiryat Gat (Hebrew for wine press) is in doubt, Calcalist recalls. Even without the power plant, the new chip factory would be the largest single investment in Israel's history.
According to BNN Bloomberg, construction has not been canceled, but postponed. Insiders have revealed this to Bloomberg. The company itself is not giving any clear information: a company spokesperson emphasized to Calcalist and Bloomberg that Intel is still relying on Israel for production and development. However, the scope and expansion of production depends on "a number of changing factors." In addition, it is the nature of large projects like this that schedules change. "Our decisions are based on the circumstances of our business, market dynamics and responsible capital management."
"Smart capital"
And it is precisely with regard to capital management that Intel CEO Pat Gelsinger has recently set new guidelines. He is focusing on "smart capital" and the Group should generally become more liquid. This means that Intel must either find more external investors, postpone or cancel investments in order to avoid tying up so much capital at once.
Intel already operates a chip factory in Kiryat Gat. Processors using 10-nanometer technology have been manufactured there to date. In 2021, Intel began expanding this production facility, known as Fab 28, at a cost of more than 10 billion US dollars in order to increase production capacity. As of 2023, Intel employs around 11,700 people in Israel in three research and development centers and in the existing chip factory. Intel announced its plans for an additional chip factory in Israel a year ago and only confirmed them in December.
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