Rumors of cancellation of Intel factory expansion in Israel unfounded, official says

On Monday, reports surfaced suggesting that Intel may have canceled a plan to expand a factory in Israel. The business news site Calcalist headlined its report “Intel Global halts Kiryat Gat factory expansion,” according to an automatic translation of the article. However, it also cited senior government officials as saying that there had been no change in Intel’s planned investments in Israel. A standardized statement from Intel was also released, implying that the evidence on which the initial reports were based was only an indication of a “schedule adjustment.”

Intel announced plans to expand its Kiryat Gat factory in December 2023. According to reports at the time, Intel would invest a whopping $25 billion in the project. To encourage this expansion, the Israeli government agreed to support the Intel project with $3.25 million. Additionally, in March this year, a new $900 million power plant was commissioned, supported by a memorandum of understanding signed with Intel.

Calcalist’s report began with the announcement that several equipment and materials suppliers working on the expansion of Intel’s Kiryat Gat factory had had their contracts canceled. Concerns were also raised when business journalists in Israel learned that several top Intel Israel executives had recently moved to Intel Ohio. The relocation of personnel was presented as being encouraged by the CHIPs Act’s goal of further encouraging the development of the semiconductor industry on American soil.

In response to earlier reports, Calcalist received the following statement from Intel: “Israel continues to be one of our key global manufacturing and R&D locations and we remain fully committed to the region,” wrote a spokesperson -speech. “As we have noted previously, the scale and pace of Intel’s manufacturing expansion at our locations around the world is highly dependent on a variety of factors. Managing large-scale projects, especially in our industry, often involves adapting to changing deadlines. Our decisions are based on business conditions, market dynamics and responsible capital management.

The Israeli Finance Ministry also says it has spoken with senior Intel officials. This particular conversation indicated that there had been a change of contractor at Kiryat Gat, which would explain the cancellation of existing contracts. Additionally, this source indicates that there will be no significant delays in the $25 billion project.

Reading between the lines and weighing the statements shared by Calcalist from Intel and local government, we believe there could be unintentional delays, but there are no real signs of cancellation of expansion plans of Intel in Israel.

Massive projects in the semiconductor industry are not immune to delays, far from it. Construction on Intel’s new factories in Ohio began in September 2022, but in March we learned that planned launch dates had been pushed back from 2025 to 2027/28.