Finance Minister Bezalel Smotrich, on Sunday, informed the government that after a successful negotiation, Intel agreed to build a new chip production plant with an investment of 25 billion dollars. The announcement was made at the start of the weekly cabinet meeting while cameras were allowed in to record opening remarks.
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Prime Minister Benjamin Netanyahu said this was the largest investment in Israel's economy, ever by an international company and was proof of the confidence in Israel's economy, a sentiment echoed by his finance minister.
But after Intel denied the report, the Finance Ministry corrected its announcement to explain that the new plant was already agreed upon in 2018 but its construction had not been completed, the investment by the chip maker would be 10 billion dollars and would be made in exchange for a onetime payment of 1 billion dollars by the government.
The ministry explained that Israel's contribution to the expanded Intel facility was in line with the "Law for Encouragement of Capital Investments," stipulating 12.8% of the overall investment needed, to be given by the government and that Intel would be required to meet deadlines in order to receive the funds.
"Intel is expected to employ thousands of additional high-paid workers in its Kiryat Gat chip production facility and agreed to increase tax payments to 7%. Production is to begin in 2027 and continue at least until 2035," the ministry said in its statement.
Although Intel would not confirm an agreement with the Israeli government had been reached, it described Israel as a hub for technological talent and innovation. "Our intention to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs ... and we appreciate the continued support of the Israeli government," Intel said.
Last January, the company suspended the construction of a new facility in Haifa, citing the need to cut costs. Some 12,000 Israelis are employed by the chip maker which is the largest private job provider in Israel.