Israel to Give Intel $3.2 Billion for Chip Plant Near Fallujah, Palestine

Israeli government approves to give Intel Core an amount of $ 3.2 billion to build a new chip plant that costs 25 billion dollars in Southern Israel, as announced by both parties on Tuesday.

This comes while Israel is continuing its war on Gaza, ever since Hamas had attacked Israeli targets on October 7.

The company said in a statement, the expansion plan of its position in Kiryat Gat, near Falluja village in Palestine “is an important part of our efforts to establish a stronger global supply chain, along with current the company’s current and planned manufacturing investments in Europe and the U.S.”‎

In addition to the grant that is about of 12.8% of the overall investments, the manufacturing giant is committed to buying NIS 60 billion ($16.6 billion) worth of goods and services from Israeli suppliers over 10 years, and the plant is expected to create thousands of job opportunities.‎

Intel operates 4 development and production sites in Israel, including a manufacturing unit in Kiryat Gat, and has approximately 12 thousand employees in Israel.

In June, Israeli Prime Minister Benjamin Netanyahu said the company would build a new $25 billion chip factory in Israel, but Intel had so far refused to confirm the investment.

The company stated that construction work was already under way to expand the site, including clean rooms and supporting buildings, noting that a large part of the buildings, including the laying of foundations and first floors, had been completed.

The new plant is expected to be launched in 2027, and to reach full operation in 2035.

These developments come as Israel’s high-tech industry, which has thrived during the coronavirus pandemic, is experiencing difficulties due to the ongoing war on Gaza.

The industry typically represents 18% of Israel’s GDP and half of its total exports. According to a previous Reuters report, Israel’s high-tech sector faces several challenges due to its war on Gaza.

“Productivity drops dramatically, because it’s hard to focus on everyday work when you have concerns about your presence,” said Barak Klein, CFO of Thetaray Fintech.

Dror Bin, chief executive of Israel’s state-funded Innovation Authority, said an estimated 10 to 15% of the high-tech workforce had been called in to serve in the reserve forces. Bin added that Israel is “in contact with hundreds of technology companies, especially as the projects are in the early stages” explaining that many of them are in the middle of the funding cycle and are already running out of funds.

The Authority established a fund of NIS 100 million (approximately $25 million) to help 100 technology start-ups withstand the storm.

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