Intel will build $25 billion chip factory in Israel’s ‘largest investment ever’

(CNN) — The Israeli government and Intel confirmed plans to build a $25 billion chipmaking factory in the south of the country, an investment Prime Minister Benjamin Netanyahu has described as the biggest in Israel’s history.

The American tech giant already employs 11,700 people in Israel and has invested more than $50 billion in the country over the last 50 years.

Intel now wants to expand its existing chipmaking factory at Kiryat Gat — about 16 miles northeast of Gaza — undeterred by the October 7 attacks and the ongoing war between Israel and Hamas. Reuters earlier reported the news.

“Intel has chosen to approve an unprecedented investment of $25 billion and to establish its new factory right here in Israel,” Israel’s finance minister Bezalel Smotrich wrote in a post on X on Tuesday.

“This investment promises to foster high-quality employment opportunities with elevated productivity in remote areas and will significantly contribute to the growth of the Israeli economy,” he added.

Netanyahu initially announced the new factory in June, describing it as “the largest investment ever by an international company in Israel.”

Intel (INTC) did not confirm the new investment at the time, saying only that its Israel operations were crucial to the company’s success and that plans to expand them were driven by a commitment to meet future manufacturing needs.

The company confirmed the investment plans on Tuesday.

“The growth of our Kiryat Gat manufacturing facilities is a tremendous source of pride for our employees in Israel, and a reflection of their unwavering commitment to excellence,” said Daniel Benatar, co-general manager of Intel Israel, in a statement. “Support from the Israeli government will enable us to continue building on that excellence to ensure that Israel remains a global center of semiconductor technology and talent.”

Intel said the expansion plan for the Kiryat Gat site will help bolster its ability to source materials and chips around the world. The company is investing heavily in a bid to reassert its position as the leader of the semiconductor industry and to build greater resilience into supply chains in the face of rising geopolitical tension. It said in 2022 that it would invest $20 billion to build two new US chipmaking facilities, as well as up to $90 billion in new European factories.

The Israeli government will provide a grant of $3.2 billion for the expansion of the Kiryat Gat plant, spread over several years, Israeli media reported.

Intel has committed to buy 60 billion shekels ($16.6 billion) worth of goods and services from Israeli suppliers over the next decade, Reuters reported, citing the company’s statement.

Construction work was already underway to prepare for the expansion of the site, and a significant portion of the buildings had been completed, the news agency added.

The new plant is due to open in 2028 and operate through 2035.

Including Kiryat Gat, Intel’s most advanced manufacturing facility, the company has four development and production sites in Israel.

Intel also bought Israeli driver-assist technology startup Mobileye for $15.3 billion in 2017, before taking it public just over a year ago.

In February 2022, it announced plans to buy Israeli chipmaker Tower Semiconductor for $5.4 billion, but that deal was scrapped earlier this year after it failed to obtain the required regulatory approvals. The acquisition reportedly collapsed because China’s antitrust regulator didn’t provide clearance.

This story has been updated with additional developments and context.

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Hagi Cohen-Boland contributed to this article.