Intel reportedly delaying massive new chip plant in Israel

Company officials meet with contractors to inform them of 6- to 12-month postponement in setting up $5 billion production facility in Kiryat Gat

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

Intel's manufacturing plant in Kiryat Gat in southern Israel (Courtesy)
Intel's manufacturing plant in Kiryat Gat in southern Israel (Courtesy)

US tech giant Intel Corp. is delaying the setting up of its new semiconductor plant in Israel and has met with contractors to inform them about the delay, Calcalist reported Monday, citing contractors who had been in the meeting.

One of the contractors said they were told that the delay would be of half a year to a year, but no date had been set for the start of the work.

In May, Intel confirmed plans to invest some $5 billion in expanding its Kiryat Gat production plant in Israel, where it produces and develops some of its most advanced computer chips, through 2020. As part of the investment plan, Intel is expected to get a 5 percent tax rebate until the end of 2027, as well as a NIS 700 million ($194 million) government grant.

When asked about investment in the plant, Intel CEO Bob Swan, who is on a visit to Israel, said on Sunday that the firm had made a decision to increase its production capacity in Israel, the US and Ireland to meet growing demand.

Bob Swan, the CEO of Intel Corp., left, and Yaniv Garty, general manager of Intel Israel at a press conference on June 16, 2019 at the Peres Center for Peace and Innovation to launch a new accelerator program in Tel Aviv (Shoshanna Solomon/Times of Israel)

“That is our intention and we filed a business plan back in December or January here,” he said, referring to Israel. “Our intentions are to expand our capacity and our facilities in those three particular markets over time such that we never constrain growth of our customers. That has not changed.”

Commenting on the Calcalist report, Intel said in a text message that “Intel is committed to Israel and continues to invest in it. Israel is one of Intel’s global manufacturing and development centers, with activities such as the production plant in Kiryat Gat and the management headquarters of Mobileye in Jerusalem.”

Intel submitted a business plan to Israel’s regulators in January, the text said, “and since then has not issued an update on the new projects.” The statement added that “every investment is carried out in stages, and there may always be changes, according to business, economic and other needs.”

Calcalist said that Intel has decided to proceed first with its Ireland plant, and at a slower pace with the Israeli one.

On Sunday, Swan launched an open-innovation startup accelerator program in Tel Aviv that will help grow early-stage companies in Israel in key industries, including artificial intelligence, autonomous systems and other data-centric technologies.

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