Intel Loses 1.3 Billion Shekel Grant Due to Expansion Delays

Intel dragged its feet and the state cancelled a 1.3 billion shekel grant for it.

Freezing the expansion of the plant in Kiryat Gat is costing Intel dearly, with the cancellation of a 1.3 billion shekel grant. Intel stated: "Our expansion plan in Israel is currently under review."

The Intel plant in Kiryat Gat, which manufactures chips using the 10-nanometer technology known as "Intel 7," is considered one of the most important production facilities of the American giant worldwide. It is no coincidence that Dani Benatar, who was responsible for building the plant and implementing its processes, was promoted to the position of co-general manager of Intel's global manufacturing operations. But two years have passed since Intel froze the expansion of its southern plant. At the same time, the company reduced its number of employees in Israel from 12,000 to 9,000 following various global adjustments, and now the state's response has arrived.

The heavy machinery stopped

Intel's original plan included the construction of two new clean rooms, but the company's financial distress, which also led to the cancellation of plants in Europe, along with the ongoing security situation in Israel, stopped the heavy machinery. In 2024, it became known that the company had effectively frozen construction procedures. Now, this decision is taking its toll.

The Budget Department of the Ministry of Finance decided not to wait any longer and cancelled a huge grant of 1.3 billion shekels that was supposed to be transferred to Intel during 2025. However, the Ministry of Finance did decide to leave, for now, the grant planned for the end of 2026, which stands at a little over a billion shekels, in case the company decides to resume work after all.

Increased investment and reduced corporate tax

In 2023, the government committed to investing over 11 billion shekels in grants in exchange for the construction of a new Intel chip plant with a total investment of 89 billion shekels. The state even agreed to increase the grant rate to 12.5 percent of the total investment, alongside a reduced corporate tax of 7.5 percent. But while the plant in Israel was waiting for an upgrade, Intel chose to invest 5 billion euros specifically in its plant in Ireland, which produces processors using more advanced 5-nanometer technology. Despite the freezing of the work, it is important to note that Intel still received a grant of 1.5 billion shekels for its activity in 2024.

"As we have announced in the past, our expansion plan in Israel is currently under review to ensure it aligns with customer needs," Intel responded.