On 26 December 2023, Israel's government agreed to give Intel a $3.2 billion grant towards a new $25 billion chip plant in Kiryat Gat, southern Israel. Both sides described it as the largest investment ever made by a company in Israel. The plant, Fab 38, was reported to be due to open in 2028 and operate through 2035, next to Intel's existing Fab 28.
This post covers the announcement as reported at the time, what it meant for Intel's manufacturing strategy, and a short note on later reports about the project.
Key facts (as reported in December 2023)
| Item | Detail |
|---|---|
| Total investment | $25 billion |
| Government grant | $3.2 billion, about 12.8% of the investment |
| Location | Kiryat Gat, southern Israel, alongside Fab 28 |
| Plant name | Fab 38 |
| Planned operation | Opening 2028 (Calcalist reported 2027), operating through 2035 |
| Jobs | Expected to create several thousand jobs |
| Local purchasing | Intel committed to buy 60 billion shekels (about $16.6 billion) of goods and services from Israeli suppliers over the next decade |
The announcement
Israel's government agreed to grant Intel $3.2 billion for the new plant [1]. The investment was described as the largest ever by a company in Israel and was expected to create several thousand jobs [2]. The new plant, Fab 38, was planned to open in 2028 and operate through 2035 [1]. It sits in Kiryat Gat, alongside Intel's existing manufacturing plant, Fab 28, which produces Intel 7 technology, Intel's name for its 10-nanometer-class process [2].
Prime Minister Benjamin Netanyahu had said in June 2023 that Intel would build a $25 billion plant in Israel, but Intel had not confirmed the investment until this agreement [2]. Intel did not say which process technology Fab 38 would run [2].
Why it mattered for Intel
The plant was part of Intel's effort to regain its leadership in chip manufacturing. In an interview with Calcalist, Daniel Benatar, co-general manager of Intel Worldwide Semiconductor Manufacturing, said the plant would be able to produce the most advanced chips, meeting the needs of companies such as Apple and Nvidia, and that it supported Intel's strategy of making products both for itself and for external customers [3]. That second point is the foundry model: Intel building chips for other companies as well as its own.
Intel had already committed billions to new factories across three continents, including the Israeli plant, to expand its manufacturing capacity and compete with rivals such as AMD, Nvidia and Samsung [4]. At the time, its plans also included major projects in the United States and in Magdeburg, Germany.
Why it mattered for Israel
The government's grant was a significant show of support for Intel and for Israel's high-tech sector, announced while the country was at war following the 7 October 2023 attacks. Intel has been in Israel since 1974 and, as reported in December 2023, operated four development and production sites in the country, employing nearly 12,000 people directly and an additional 42,000 indirectly [2]. Officials said the fiscal benefits to the state would be significantly higher than the grant [2].
What to watch
- Process node: which Intel process the plant would run, and whether it would serve foundry customers.
- Schedule: whether the 2027 to 2028 opening held, given Intel's wider spending decisions.
- Grant conditions: how the grant was tied to investment and employment milestones.
Later reports
This article reflects the news of December 2023. In June 2024, Israeli media reported that Intel had paused construction of the Kiryat Gat expansion as it cut capital spending, and in 2025 Intel said it would not proceed with its planned fabs in Germany and Poland. These later reports are summarised here for context and have not been re-verified for this update; check Intel's own statements for the current status of Fab 38.
FAQ
How much did Israel give Intel for the new fab?
A grant of $3.2 billion, about 12.8% of the planned $25 billion investment, as announced in December 2023.
Where is Intel's new fab in Israel?
In Kiryat Gat in southern Israel, next to Intel's existing Fab 28.
What does Fab 28 make?
As reported in 2023, Fab 28 produces chips on Intel 7, Intel's name for its 10-nanometer-class process.
Citations
- Reuters, Intel to get $3.2 billion government grant for new $25 billion Israel chip plant, 26 December 2023
- CNBC, Israel grants Intel $3.2 billion for new $25 billion chip plant, 26 December 2023
- Calcalist (CTech), report on Intel's new Kiryat Gat plant, December 2023
- Al Jazeera, Israel grants Intel $3.2bn for largest-ever $25bn chip plant investment, 26 December 2023
- CNN, Intel Israel investment report, 26 December 2023
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