Intel suspends US$25bn Israel chip plant project

US-based technology giant and semiconductor chipmaker Intel is suspending its planned US$25 billion construction and expansion of a chip-making facility in Kiryat Gat, Israel, but did not link the decision to the ongoing war between Israel and Hamas in Gaza.

Intel Israel plant (Image: Intel) Intel’s existing plant in Kiryat Gat, Israel. (Image: Intel)

The company was committed to building a $10 billion plant at the site – construction for which was already underway – but upped its investment in December 2023 to a total of $25 billion. The additional financing was said to secure a $3.2 billion grant from the Israeli government.

Intel already operates a manufacturing plant at the Kiryat Gat location that products Intel 7 technology and employs 12,000 people in-country.

Israel media said the construction stoppage was relevant to about NIS 90 million, or approximately $25 billion, suggesting the entire build and expansion is currently on pause.

In statements to press, Intel acknowledged that large-scale projects “often involves adapting to changing timelines,” but made no mention of global conflict between Israel and Hamas.

Bangladesh-based infrastructure company Sicho, in a statement to the Israeli stock exchange, said more than half of the value for the work was already received; more than $18-billion worth.

Israeli media reported that Intel clarified the action involves “a change to a contract with a contractor” but offered no additional details.

Furthermore, the build and agreement with the Israeli government also included commitments from Intel to purchase $16.6 billion-worth of goods and services from Israeli firms through the next decade.

Despite the stoppage, Intel said it maintains committed to the region, which it entered in the 1970s.

The new plant’s original timeline set a 2028 open date with operations scheduled through 2035.

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