Intel halts planned factory expansion in Israel

Tech giant informs Finance Ministry of planned pause in project after contractors receive notifications about their deals with the company being frozen; ministry says no change to overall expansion plan 

Sophie Shulman/Calcalist|
Intel suppliers recently received a notification about the cancellation of contracts signed with them for the supply of equipment and materials needed for the expansion of the company's new factory in Israel. The Finance Ministry was aware of the company’s decision to halt the facility’s construction.
The tech giant’s plant expansion, officially announced in December 2023, was set to be carried out with an investment of $25 billion. Under the agreement with Israel for the expansion of the factory in the country, the company was supposed to receive incentives worth 3.2 billion shekels and, in return, committed to purchasing products and services worth 60 billion shekels from Israeli suppliers over the next decade.
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(Photo: Reuters)
In March, it was reported that OPC Energy is expected to establish a power plant for Intel in Kiryat Gat with an investment of up to $900 million. The company, headed by Idan Ofer, signed a memorandum of understanding with Intel in Israel. If a final agreement is indeed signed, the construction of the plant is expected to take place in 2026, and OPC will supply it with electricity for 20 years.
Ynet’s sister outlet Calcalist also learned several senior executives at Intel Israel have relocated to the plant currently being built in Ohio, as part of a U.S. plan to encourage chip manufacturing plants in the state.
"Israel continues to be one of our key global production and R&D sites, and we remain committed to the region,” Intel said in a statement. "As said previously, the scope and pace of Intel's production expansion at company sites worldwide depend on several variable factors.
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Intel's Kiryat Gat factory
Intel's Kiryat Gat factory
Intel's Kiryat Gat factory
(Photo: Intel)
“Managing a project of this scale, especially in our industry, typically includes schedule adjustments. Our decisions are based on business conditions, market dynamics, and responsible capital management."
Finance Ministry senior officials who are leading the Intel deal and spoke with Calcalist, said there’s no planned change in Intel's investment volume in Israel nor in the grants the government is expected to transfer to the company.
Calcalist learned that following media reports on the matter, the Finance Ministry contacted the highest senior officials at Intel Israel, and the company clarified the issue arose from a contract change with a contractor, and it isn’t expected a project of this scale wouldn’t be forced to reschedule.
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