Intel will build a new $25 billion chip factory in southern Israel. The Israeli government is also investing $3.2 billion in the project. This is the largest investment in a manufacturing facility ever, with the aim of strengthening global semiconductor supply chains and reducing dependence on Taiwan. The new factory, to be named Fab 38, will be built next to the existing Fab 28 facility in Kiryat Gat. Construction of the facility has already begun and is expected to be completed in 2028. The chip factory will be active until 2035. Intel expects to create a thousand jobs.
Existing Fab 28 facility in Israel.
In addition to the subsidy that Intel receives from the local government, they receive a reduced corporate tax rate of 7.5%, with the condition that they purchase locally. This is all happening during the conflict between Israel and the Palestinian militant group, Hamas.
Despite this, and because Intel has been present in Israel for some time, the country appears to be maintaining its economic priorities. The main processor technology is designed in Israeli laboratories. The expansion in Kiryat Gat is in line with Intel CEO Pat Gelsinger’s strategy to implement product diversification through investments in the US, Europe and Israel. They also recently made a $20 billion investment in a factory project in Ohio, USA. Intel is strategically using significant government support to increase its market dominance against rivals such as AMD and Nvidia by scaling production. Intel’s new facility in Israel will complement Intel’s range of leading technologies and help maintain Israel’s reputation as a global semiconductor hub.