Intel to expand in Israel with new wafer fab in a race to diversify chip supply chains

Intel and Israel reached a preliminary deal to expand manufacturing capacity in the country as the chip giant seeks to retake leadership of the industry

The facility will be for wafer fabrication, a segment in which Israel is already one of Intel’s four major providers

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Published: 10:12am, 19 Jun 2023

Intel Corp has agreed in principle to build a new manufacturing plant in Israel, part of a push by the US semiconductor giant and its chip peers to diversify their production sources.

The preliminary deal was announced by Israel’s finance ministry and Prime Minister Benjamin Netanyahu on Sunday. Intel confirmed the company’s “intention to expand manufacturing capacity in Israel”, where it is already active, but didn’t specify the terms or provide other details.

The facility will be for wafer fabrication, a segment in which Israel is already one of Intel’s four major providers, according to a person familiar with the plans who wasn’t authorised to speak publicly.

The expansion will further an effort by Intel chief executive officer Pat Gelsinger to locate more manufacturing outside of Asia, which dominates chip production. He’s also striving to restore the chip pioneer’s technological leadership after companies like Nvidia Corp and Taiwan Semiconductor Manufacturing Co eclipsed its capabilities.

While Netanyahu put the value of the deal at $25 billion, which he said was the largest foreign investment in Israel and an “expression of confidence” in the nation’s economy, the person familiar said the total included a previous, $10 billion investment announced in 2021.

According to Israeli officials, the project will add thousands of jobs to the almost 12,000 workers now employed by Intel in the country. The new plant – to join an existing one in Kiryat Gat, south of Tel Aviv – is slated to begin operations by 2027 and remain active until at least 2035, the ministry said. As part of the agreement, Intel will pay a 7.5 per cent tax rate in Israel instead of the 5 per cent it pays now.

Sunday’s announcement caps a busy time for the chip industry. Intel on Friday announced a US$4.6 billion facility in Wroclaw, Poland. Another US chip maker, Micron Technology Inc, is close to an agreement to commit at least US$1 billion toward setting up a semiconductor packaging factory in India, Bloomberg News reported the same day, citing people familiar with the matter. The development plans highlight the global race to diversify supplies of critical components amid US tensions with China.

Intel to expand in Israel with new wafer fab in a race to diversify chip supply chains

Intel and Israel reached a preliminary deal to expand manufacturing capacity in the country as the chip giant seeks to retake leadership of the industry The facility will be for wafer fabrication, a segment in which Israel is already one of Intel’s four major providers

Intel and Israel reached a preliminary deal to expand manufacturing capacity in the country as the chip giant seeks to retake leadership of the industry

The facility will be for wafer fabrication, a segment in which Israel is already one of Intel’s four major providers