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Intel stops construction of $25 billion chip factory in Israel

The deal, announced in December of 2023, was slated to be the largest investment the international chipmaker has made in Israel so far. 

By Vered Weiss, World Israel News

Intel’s $25 billion chip factory in Israel has been halted, although the chipmaker said in a statement that it was ‘still committed to the region.’

In the last few days, Intel’s suppliers received notice to halt the delivery of materials and cancel contracts required to establish the chip factory.

According to Calcalist, Israel’s Ministry of Finance was already aware of the decision to stop the construction, with the financial news outlet speculating whether it was a delay or a cancellation of the deal.

“Is Intel’s new $25 billion factory in Israel in danger of being canceled?” Calcalist posed.

The $25 billion deal for the construction of the chip plant, announced in December 2023, was slated to be the largest investment the international chipmaker has made in Israel so far.

The factory, which was supposed to have been built in Kiryat Gat, would have meant $3.2 billion in incentives for Intel, with the chipmaker committing to purchasing $60 billion from Israeli suppliers.

As late as March, it was reported that OPC was expected to build a power plant for Intel with an investment of $900,000 million.

Idan Ofer, the head of OPC, signed a memorandum of understanding with Intel, and construction of the power plant was slated for completion by 2026.

It has also been reported that several Intel officials in Israel have moved to Ohio to work at the Intel factory that is being established there.

Intel, which has four development sites in Israel and employs 12,000 Israelis, has said that it is “still committed to the region,” not defining whether “region” meant Israel specifically or possibly another location in the Middle East.

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

It continued, “As mentioned previously, the scope and rate of expansion of Intel’s production at the company’s sites around the world depend on a number of changing factors.”

“Managing a project of this magnitude, especially in our industry, usually involves schedule adjustments. Our decisions are based on business conditions, market dynamics, and responsible capital management,” it concluded.