Intel will spend $25 billion to modernize its chip factory in Israel, says Netanyahu

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

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

Intel announced the first $10 billion phase of its expansion plan two years ago, making the additional $15 billion commitment the latest in a series of megaprojects designed to boost Intel’s manufacturing footprint after a period of underinvestment and make it more competitive with Taiwan. TSMC.

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

Intel is in talks with Germany about increasing 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. It said last week it would build a $4.6 billion semiconductor assembly and testing plant in Poland and is in discussions about building a similar plant in Italy.

The wave of new facilities comes at a time when Intel has suffered a severe cyclical collapse in demand, putting pressure on its finances. It also faces questions about whether it can move quickly enough with new manufacturing processes and chip designs to take advantage of the growing demand for chips from artificial intelligence.

The company has already indicated that it may push back some of its investment, saying it is only moving ahead with building construction for its new facility and holding back the more expensive work of getting it ready until it is sure when demand will pick up.

“Our intent to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs . . . We appreciate the Israeli government’s continued support,” Intel said in a statement.

Since Netanyahu’s far-right government unveiled controversial plans to reform the judiciary earlier this year, hundreds of thousands of Israelis have taken part in weekly protests, and leaders from the booming tech sector have been among the proposals’ most outspoken critics.

The head of the Central Bank of Israel warned last month that the struggle over reform had caused a “major domestic shock” to the economy. Meanwhile, the Israel Innovation Authority warned in May of a “significant increase” in the number of Israeli startups registered abroad rather than in Israel.

Netanyahu has consistently downplayed concerns about the economic impact of the judicial reform and said on Sunday that the planned investment by Intel was “an expression of great confidence in the Israeli economy.”

“[It] It reflects exactly the strength of the free economy we’ve built here and the tech economy we’re developing.”

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