Intel Pauses Israel Wafer Fab Construction

Intel made headlines in December 2023 with the announcement of a massive $25 billion investment plan in Israel. This investment is set to bring cutting-edge 2nm manufacturing process technology to the region, supported by a substantial $3.2 billion subsidy from the Israeli government. The new facility, scheduled to commence wafer production in 2028, marks a significant commitment by Intel to expand its operations in the country. Currently, Intel's operational fab in Kiryat Gat, Fab 28, focuses on producing 10nm chips.

Local reports have raised concerns about the cancellation of contracts with some suppliers of equipment and materials for the new facility. However, Ministry of Finance officials have clarified that these changes do not impact Intel's overall investment plans in Israel. According to Intel, the recent developments are merely part of standard contractual adjustments, and the company remains dedicated to its manufacturing and R&D operations in the region.

Intel emphasized its commitment to Israel, stating, "Israel continues to be one of our key global manufacturing and R&D sites. The scope and pace of Intel's production expansion worldwide are subject to various factors, including business conditions and market dynamics. Managing a project of this scale involves making schedule adjustments to ensure responsible capital management."

With wafer production not expected to begin until 2028, Israel has the flexibility to adjust the development timeline at the Kiryat Gat facility. However, concerns have been raised in Israel about potential hesitancy among investors due to the ongoing conflict in Gaza. Despite these challenges, Intel remains focused on its long-term investment strategy in the region.

In a separate development, Intel recently finalized a deal with Apollo-managed funds and affiliates for an $11 billion investment in a joint venture entity related to Intel's Fab 34 in Leixlip, Ireland. This transaction, part of Intel's Semiconductor Co-Investment Program (SCIP), highlights the company's commitment to expanding its global manufacturing footprint and fostering strategic partnerships.