Intel will spend 25 billion dollars on upgrading the chip plant in Israel, says Netanyahu

Intel has agreed “in principle” to invest about $25 billion in a new chip factory in Israel, Prime Minister Benjamin Netanyahu said Sunday.

The US semiconductor group said it had “submitted a business plan to upgrade its manufacturing facilities in Israel”, where it has operated since 1974, but declined to confirm “specific details of the project”.

Intel announced a $10 billion first phase of its expansion plan two years ago, making the additional $15 billion commitment the latest in a series of giant projects designed to increase Intel̵[ads1]7;s manufacturing footprint after a period of underinvestment and make it more competitive with Taiwan’s TSMC.

Netanyahu said the new factory in Kiryat Gat, where Intel already has a facility, would be “the biggest investment ever” in Israel.

Intel is in talks with Germany to increase subsidies for a 20 billion euro plant in Magdeburg and has also announced investments of more than $50 billion to build new sites or expand existing manufacturing facilities in Ohio, Arizona and Ireland. Last week it said it would build a $4.6 billion semiconductor assembly and test facility in Poland and is in discussions to build a similar facility in Italy.

The wave of new facilities comes at a time when Intel has suffered from a severe cyclical collapse in demand, which has put a strain on the economy. It also faces questions about whether it can move fast enough with new manufacturing processes and chip designs to cash in on the soaring chip demand from AI.

The company has already signaled that it may push back some of its investment, saying it is only moving ahead with building the buildings for its new facilities and holding back on the more expensive work of equipping them until it is certain when demand will pick up again.

“Our intention to expand manufacturing capacity in Israel is driven by our commitment to meet future manufacturing needs . . . and we appreciate the continued support of the Israeli government,” Intel said in a statement.

Since Netanyahu’s far-right government unveiled controversial plans to overhaul the judiciary earlier this year, hundreds of thousands of Israelis have taken part in weekly protests, with executives from the booming technology sector among the most vocal critics of the proposals.

The head of Israel’s central bank warned last month that the battle over the overhaul had given the economy a “significant domestic shock”. Meanwhile, the Israel Innovation Authority warned in May that there had been “a significant increase” in the number of Israeli start-ups registering abroad rather than in Israel.

Netanyahu has consistently played down fears of the financial ramifications of the legal overhaul, saying on Sunday that the planned investment by Intel was an “expression of great confidence in the Israeli economy”.

“[It] accurately reflects the strength of the free economy that we have built here and the technological economy that we are developing, he said.

The Israeli Finance Ministry said the project was expected to employ thousands of new workers. It added that as part of the deal, Intel would pay a local tax rate of 7.5 percent, up from the current 5 percent.

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