United States-based semiconductor chip manufacturer Intel has been doing business with Israel for quite some time now. Recently, you may have heard the news about Intel investing a whopping $25 billion in Israel to build a chipmaking plant. Israel’s prime minister, Benjamin Netanyahu, said Intel’s investment is the “largest ever” in Israel.
Intel’s $25 billion investment in Israel
Intel Corporation has agreed in principle with the government of Israel to construct a chip manufacturing plant in the city of Kiryat Gat at an investment of $25 billion.
Intel’s chipmaking factory will stand at Kiryat Gat, a city in Israel’s Southern District, located south of Tel Aviv, north of Beersheba, and west southwest of Jerusalem, the country’s capital. The plant is projected to open by 2027 and remain operational until at least 2035. Israel’s ministry stated that this would create jobs paying higher-than-average wages.
A global center of technical talent, innovation
“Israel is a global center of technical talent and innovation and one of Intel’s significant global manufacturing and R&D centers,” Intel told news media. “Our intention to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs and supporting Intel’s IDM 2.0 strategy, and we appreciate the continued support of the Israeli government.”
The Israeli prime minister said this investment from Intel is “unprecedented” and would be used to build a chipmaking factory utilizing the world’s most advanced technologies. Netanyahu also said it is the largest investment Israel will ever receive.
“This is the largest investment ever in the State of Israel,” Netanyahu said during a televised remark to the cabinet yesterday. “This is an expression of great confidence in the Israeli economy and exactly reflects the strength of the free economy that we have built here, and the technological economy that we are developing here.”
‘Largest ever’
As part of the deal, the semiconductor chip manufacturer is bound to pay a 7.5 percent tax rate, higher than the five percent Intel currently pays Israel, according to the country’s finance ministry.
Additionally, Intel would also receive a government grant at a 12.8 percent rate of the investment amount, adhering to the Encouragement of Capital Investment Law, a law in Israel designated to stimulate capital investment and economic entrepreneurship that involve technological innovation and manufacturing activities.
“Intel’s investment will yield significant economic benefits to the State of Israel in general and to the southern region in particular,” Israel’s Budget Commissioner Yogev Gardos said. “The negotiations with the company were… based on economic models to examine the benefits of the investment, in order to maximize value for the Israeli public while promoting investment in Israel against the alternative options available to Intel globally.”
Part of various other partnerships
This investment is part of various other partnerships Intel has with Israel. In 2017, Intel bought the self-driving tech developer Mobileye for over $15 billion. Since then, Mobileye has become a central part of Intel’s global operations.
Last year, Intel also acquired Granulate, an Israeli computing tech startup, for $650 million. This is Intel’s seventh purchase of an Israel-based company in just around five years.
