Intel To Expand Israel Operations, Invest $11B In New Chip Plant

Chip giant Intel announced plans to significantly expand its operations in Israel, saying it was in the process of submitting a business plan to the Israeli government for continued investment in the company’s Kiryat Gat manufacturing site in the country’s south.

According to Israeli Finance Minister Moshe Kahlon, the investment will be to the tune of some NIS 40 billion ($10.88 billion). Kahlon said on Twitter that Intel’s international management team informed the Israel government of its “unprecedented decision” on Monday night. The move, he said, is “expected to bring thousands of jobs to the south [of Israel].”

“The business plan that will be submitted continues to prepare for Intel’s future in Israel and Kiryat Gat and continues to demonstrate the strong performance of Intel Israel,” said Daniel Benatar, VP, General Manager of Intel’s manufacturing plant in Kiryat Gat. “We continue to lead in terms of corporate economic and social investment in Israel.”

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Yaniv Gary, VP, Intel Israel GM, said in a statement: “Our continued confidence in Intel’s future and excellent partnership with the State of Israel is at the foundation of the business plan we will submit. This plan when it comes to fruition is expected to yield great economic and social value for Israel in general and to Kiryat Gat in particular.”

Intel did not disclose details of the timetable or finances.

In May 2018, Intel said it would invest some $5 billion by 2020 to double its manufacturing operations in Israel.  Haaretz reported at the time that under the terms of the agreement with the Israeli government, Intel would get a 700 million-shekel grant ($194 million) and a reduced corporate income tax rate of just 5 percent until 2027. In return, Intel agreed to spend 3 billion shekels ($830 million) on local suppliers and will add 250 new jobs.

Intel’s offices in Haifa. Courtesy of Intel

Intel employs about 11,000 people in Israel and another 1,000 from Jerusalem-based Mobileye which is acquired in 2017 for $15.3 billion. It is considered the largest employer in the high-tech sector.

Intel says that its exports from Israel totaled $4 billion in 2018, marking an increase of some $300 million compared to 2017. The company also says that over the course of 2018, it made $1.7 billion of local procurement in Israel, purchasing materials and services from Israeli suppliers.

Since it began operations in Israel in 1974, Intel indicates that its investment in the Israeli economy has totaled $35 billion so far. The company has several sites across Israel, including the manufacturing site in Kiryat Gat, the development center in Haifa, the design and development center in Petach Tikva for the development of components and software in the cellular communications market, and a design and development center in Yakum in central Israel which provides chipsets for mobile platforms.

The company recently announced plans for manufacturing site expansions in Oregon, and Ireland. In a December post, Ann Kelleher, Intel’s senior vice president and general manager of manufacturing and operations wrote: “With the biggest market opportunity in Intel’s history ahead of us, we will take the necessary steps to prepare our global manufacturing network for
flexibility and responsiveness to changes in demand.”

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Intel is also involved in a number of investments and initiatives across Israel.

In May 2018, Intel partnered with the Tel Aviv Stock Exchange, Israeli fintech hub The Floor, and global management consulting company Accenture for a first-of-its-kind Blockchain-based new securities lending platform aimed at revolutionizing the securities lending market in Israel.

Intel’s investment arm, Intel Capital, is also a leading corporate investor in the Israeli high-tech ecosystem. Since 2017 Intel Capital has made 12 investments in Israeli startups and companies, including leading a $50 million investment round in Israeli-founded public transit company Moovit, a $75 million investment in Habana Labs, an Israeli startup that develops AI processors, a $16 million investment in Israeli gaming startup Overwolf.