Finance Minister Bezalel Smotrich, and Budgets Commissioner Yogev Gerdos on Sunday informed Prime Minister Benjamin Netanyahu and Economy Minister Nir Barkat that the lengthy negotiations between the global Intel company and the budget division of the finance ministry had concluded successfully, and agreements in principle were reached regarding Intel’s plan to invest approximately $25 billion in a new plant in Kiryat Gat.
In 1999, Intel opened in Kiryat Gat, 35 miles south of Tel Aviv, a chip fabrication plant, known as Fab 18, to produce Pentium 4 chips and flash memories. Intel received a grant of $525 million from the Israeli government to build the plant. In February 2006, the cornerstone was laid for Intel’s second Kiryat Gat plant, Fab 28. In 2021, Intel announced a $10 billion investment in new manufacturing in Kiryat Gat.
The latest investment plan is expected to yield employment for thousands of additional workers in Kiryat Gat at wages higher than the average in the chip industry. In addition, it was agreed to significantly increase the tax rate that the company will pay to the state from the current 5% to 7.5%. As part of its commitments, Intel is expected to finish the investment and start operating the plant by 2027, and continue to operate it until at least 2035.
The agreement is exceptional, especially in the current hi-tech economic environment in which many countries are competing to attract chip makers. Israel will subsidize 12.8% of the investment, conditioned on Intel’s living up to its commitments in terms of timeliness and scope of employment. Intel currently employs 12,000 in Israel, out of its estimated 130,000 global workforce.
Prime Minister Benjamin Netanyahu said in response: “I welcome this tremendous achievement for the Israeli economy – NIS 90 billion – the largest investment by an international company ever in Israel. This is a great expression of confidence in the Israeli economy, in stark contrast to all the false reports against us.”