Multiprocessor giant Intel is set to build a groundbreaking new factory in Israel with a massive investment of approximately $25 billion - the largest foreign investment in Israel's history. The announcement follows a very positive earnings report for Intel Israel last week, further highlighting the company’s commitment to expanding its operations in the region.
The successful conclusion of lengthy negotiations between Intel and the professional ranks in the Budget Division of Israel’s Ministry of Finance was conveyed to Prime Minister Benjamin Netanyahu and Economy Minister Nir Barkat. Principle agreements have been reached which outline the company’s intention to invest billions in constructing a state-of-the-art facility in Kiryat Gat.
Under the agreement, Intel is set to receive a grant of 12.8% of the total investment amount under the law aimed at encouraging capital investments.
As part of this significant investment, Intel is expected to create thousands of additional job opportunities in Kiryat Gat, offering wages higher than the industry average. Additionally, the company has agreed to a substantial increase in the tax rate it will pay to the state, raising it from the current 5% to 7.5%. To fulfill its commitments, Intel plans to complete the factory construction and commence operations by 2027, with plans to continue its operations until at least 2035.
This investment represents an unprecedented scale of commitment, offering substantial macroeconomic benefits to Israel’s economy, particularly in the face of a global economic slowdown and the fierce competition among nations to attract technology and chip manufacturing companies.
A historic achievement
Netanyahu expressed his appreciation for the historic achievement. “I welcome a tremendous achievement for the Israeli economy – NIS 90 billion – the largest investment by an international company ever in Israel. This is a great expression of confidence in the Israeli economy, in stark contrast to all the false reports against us,” he said, referring to the intense criticism generated by hundreds of economists, executives and industry experts regarding the impending judicial reform’s negative effect on the Israeli economy.
Commissioner of Budgets Yogev Gardos praised Intel’s investment, recognizing the substantial economic benefits it will bring to Israel, particularly in the southern region.
“The negotiations with the company were conducted in a long and professional manner on the basis of economic models to examine the benefits of the investment with the aim of maximizing the value for the Israeli public while promoting the investment in Israel in the face of the various alternatives available to the global company Intel,” he said.
Intel, valued at around $150 billion, operates as one of the world’s leading companies in the design and manufacturing of microprocessors and integrated circuits. The corporation employs approximately 130,000 individuals globally, with around 12,000 of them located in Israel. Intel has maintained a presence in Israel since the 1970s, operating development centers in Haifa, Jerusalem, and Petach Tikva, as well as a production plant in Kiryat Gat.
Last week, Intel Israel reported record exports of $8.7 billion for the year 2022-2023, comprising a significant 1.75% of Israel’s entire GDP and 5.5% of the country’s hi-tech exports.
Bella Abrahams, public affairs director, Intel Israel and Europe, celebrated Intel Israel’s success in both exports and diversity, stating: “Although 2022 was a tough year for the economy, industry and even society, we continued our economic and social activity and are extremely proud of our achievements.”