‘Israel’s oldest friend in technology’: Intel to invest $25 billion in new factory

US semiconductor giant Intel will spend $25 billion on a new chip manufacturing plant in Israel, officials said Sunday, in what Prime Minister Benjamin Netanyahu called the country’s largest foreign investment.

The “deal in principle” will see the semiconductor company build a facility in the southern city of Kiryat Gat, which will open in 2027 and operate until at least 2035, Israel’s finance ministry said.

“This is a great demonstration of our confidence in the Israeli economy and the strength of the free economy we have built here and the technological economy that is developing here,” Netanyahu said.

The announcement is a major victory for Netanyahu, whose government has faced criticism for putting Israel’s technology-driven economy at risk with controversial judicial reforms.

Netanyahu’s control of ministries such as defense and national security underlines the growing power of the religious right in the country, and he oversees a government that includes far-right lawmakers.

Today, the ultra-orthodox community is the fastest growing group in Israel due to its high birth rate. In the year They are expected to make up one-third of the population by 2065.

But Netanyahu’s judicial reforms have faced pressure among secular and left-leaning Israelis, particularly in the tech community. Middle East Eye previously reported how some are moving to Greece amid political wrangling over the judicial reform.

Israel’s central bank governor said in a speech last month that the economy had “suffered a major domestic shock” from the court battle.

As part of the agreement, the tax that Intel pays to Israel will increase from 5% to 7.5%, the Ministry of Finance announced in a statement.

In return, Intel will receive 12.8 percent of the cost under Israel’s capital investment incentive law, the ministry said.

According to the ministry, the two sides will start finalizing the agreement in a process that is expected to take several weeks.

Partnership since the 1970s

Intel in 2010 It has been operating in Israel since the 1970s, and its development centers and manufacturing facilities employ about 12,000 people out of the company’s global workforce of 130,000, according to the Finance Ministry.

The American tech company has come under fire from the Palestinian-led Boycott, Divestment, Sanctions (BDS) movement, which seeks to pressure Israel to end its illegal occupation of Palestinian territories through economic protests.

Intel has been called Israel’s “best friend in hi-tech,” and the BDS movement has had little success in undermining its partnership. In the year In 2017, Intel, which is publicly listed on the Nasdaq stock exchange, even acquired Israel-based Mobile, which develops automated driving systems in vehicles.

But Intel’s deepening footprint in Israel could add a new layer to Washington’s concerns about Israel’s economic relationship with China.

MEE reported in October that US officials are seeking to clarify what impact a potential free trade agreement between China and Israel will have on sensitive technologies.

Semiconductors have become a major fault line in Washington’s geopolitical rivalry with Beijing. Amid growing economic tensions between the world’s two largest economies, there are signs that China is looking to Israel for technology.

“We are increasingly seeing Israeli semiconductors going into Chinese EVs,” Dennis Zhu, an exporter of Chinese vehicles to Israel, told EE.

Under American pressure, In 2019, Israel established a government body to vet sensitive foreign investments.

But Washington is frustrated by the review panel’s process, a US official told EE.

“The process is poor. There is foot-dragging on the Israeli side. They are still very slow.” [to] The authorities should act on our threat to China.