Highlights:

  • Israeli Prime Minister Benjamin Netanyahu recently announced the agreement, and Intel has confirmed its plans to increase its manufacturing capacity in the country where it is already operational.
  • Although Netanyahu claimed that the deal is valued at USD 25 billion, Bloomberg’s source said this figure includes a previous USD 10 billion investment announced by Intel in 2021.

As part of its ongoing strategy to diversify production operations away from Asia, Intel Corp. has announced its commitment to constructing a new manufacturing facility in Kiryat Gat, Israel.

Israeli Prime Minister Benjamin Netanyahu recently announced the agreement, and Intel has confirmed its plans to increase its manufacturing capacity in the country where it is already operational.

According to an individual familiar with Intel’s plans told Bloomberg, the new establishment will be dedicated to wafer fabrication, much like the company’s current regional facilities.

In a tweet, Netanyahu’s office stated, “This is the largest investment ever in the State of Israel. It is an expression of great confidence in the Israeli economy and reflects the strength of the free economy we have built, and the technological economy we’re developing here.”

Although Netanyahu claimed that the deal is valued at USD 25 billion, Bloomberg’s source said this figure includes a previous USD 10 billion investment announced by Intel in 2021.

As a part of the “IDM 2.0” strategy, which involves constructing new manufacturing centers around the world,” Intel’s spokesperson confirmed that the chipmaker plans to “enhance manufacturing capacity in Israel,” as per the vision of Chief Executive Pat Gelsinger. To mitigate the significant supply chain issues faced during the COVID pandemic, Intel aims to decrease its dependence on Asian chip manufacturing.

Adding to its list of new manufacturing hubs, Intel has recently announced the expansion of its operations in Israel. This follows the company’s recent announcement of a USD 4.6 billion semiconductor assembly and testing facility in Wroclaw, Poland.

According to Bloomberg, Intel is expected to benefit from substantial subsidies to support its expansion endeavors. Under the agreement with Israel, the company will likely qualify for a grant equivalent to 12.8% of its total regional investment.

Taking advantage of the incentives provided by the U.S. government, which amount to approximately USD 52 billion under the Chips and Science Act enacted last year, the company is leveraging these opportunities. As a result of Europe’s implementation of the Chips Act initiative, Intel aims to secure up to USD 11 billion in subsidies from the German government. In exchange, the company plans to construct a new manufacturing complex in Magdeburg in eastern Germany.

As part of an attempt to reclaim its position as the leader in the semiconductor industry, Intel has pursued ambitious expansion plans under the leadership of Gelsinger. Due to the downturn in the personal computer market and the competition from rivals in Intel’s data center domain, the company is no longer the unchallenged leader in computer chips. Nvidia Corp, whose chips are predominantly used for artificial intelligence computing, has emerged as the new star, with a market capitalization of over USD 1 trillion, compared to Intel’s USD 150 billion.

Intel’s IDM 2.0 strategy involves enhancing its position in the contract chip manufacturing sector by utilizing its facilities to produce chips for other companies. In line with this objective, the company announced its plans to acquire Israel’s Tower Semiconductor Ltd. for USD 5.4 billion over a year ago to reinforce these plans. The deal is yet to be finalized.