Intel suspends planned $15B expansion of Israeli chip plant

Intel, the chip giant has announced the suspension of its planned $15 billion expansion for a chip manufacturing plant in Kiryat Gat, southern Israel. The tech giant maintained that the development has no link with the ongoing conflict in Gaza.

Expansion plans on hold

In December, Intel revealed its intention to boost its investment in the Kiryat Gat facility from $10 billion to $25 billion, aiming to secure a $3.2 billion grant from the Israeli government. However, Intel has now paused the next phase of this project without providing specific reasons for the delay.

“Israel continues to be one of our key global manufacturing and R&D sites, and we remain fully committed to the region,” Intel said in a statement.

The company emphasized that managing large-scale projects often requires adapting to changing timelines, with decisions influenced by business conditions, market dynamics and responsible capital management.

Project status, future plans

The expanded Kiryat Gat facility, initially expected to open by 2028 and operate until at least 2035, has seen significant progress. Construction, including clean rooms and support buildings, had already commenced, with substantial portions of the buildings completed.

Intel’s presence in Israel is significant, ranking as its third-largest country of operation by asset size, following the United States and Ireland. The company has been a major player in Israel’s tech sector for over 20 years, employing nearly 12,000 people across three R&D centers in Haifa, Petah Tikva and Jerusalem, in addition to the Kiryat Gat plant. Indirect employment created by Intel in Israel supports approximately 42,000 workers.

Previous setbacks, acquisitions

In August 2023, Intel canceled a $5.4 billion deal to acquire Tower Semiconductor, an Israeli company based in Migdal HaEmek, after failing to secure approval from Chinese regulators. As part of the contract, Intel paid $353 million to Tower Semiconductor to exit the deal.

In 2017, Intel acquired Israeli start-up Mobileye, which specializes in assistance and autonomous driving, for $15.3 billion. Intel later floated part of Mobileye’s capital on the New York Stock Exchange in October 2022 but retained control of the company.