On Monday, reports surfaced hinting that Intel may have canceled a planned factory expansion in Israel. Business news site Calcalist headlined its report “Intel Global is stopping the expansion of the factory in Kiryat Gat,” according to a machine translation of the article. However, it also cited senior government officials saying that there has been no change in Intel’s planned investments in Israel. A canned statement from Intel was also published, hinting that evidence initial reports were based upon were merely indicative of a ‘schedule adjustment.’
Intel outlined its plans to expand its Kiryat Gat factory as recently as December 2023. According to news at the time, Intel would invest a considerable sum of $25 billion into the project. To incentivize the expansion, Israel's government agreed to support the Intel project to the tune of $3.25 million. Furthermore, in March this year, a new $900 million power plant was commissioned, backed by a signed memorandum of understanding with Intel.
Calcalist's report began with news that several equipment and materials suppliers that were working on the Intel factory expansion in Kiryat Gat had had their contracts canceled. Concerns were also raised as business reporters in Israel became aware that several senior execs at Intel Israel recently relocated to Intel Ohio. The staff relocation was framed as being promoted by the CHIPs Act’s aim to encourage more semiconductor industry development on U.S. soil.
In response to earlier reporting, Calcalist received the following statement from Intel: “Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region,” wrote a spokesperson. “As we’ve previously noted, the scope and pace of Intel’s manufacturing expansion at our sites around the world depends heavily on various factors. Managing large-scale projects, especially in our industry, often involves adapting to changing timelines. Our decisions are based on business conditions, market dynamics, and responsible capital management.”
We followed up with Intel, and the company said, "Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region. As we’ve previously noted, the scope and pace of Intel’s manufacturing expansion at our sites around the world depends heavily on various factors. Managing large-scale projects, especially in our industry, often involves adapting to changing timelines. Our decisions are based on business conditions, market dynamics and responsible capital management."
Israel’s Ministry of Finance also indicates that it has spoken with senior Intel officials. That particular conversation signaled that there has 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 material delay in the $25 billion project.
Reading between the lines and weighing up the statements Calcalist shared from both Intel and local government, we think there could be some unintended delays, but there are no real signs of cancelation of Intel's Israel expansion plans.
Massive semiconductor industry projects aren’t immune to delays, far from it. Intel’s new Ohio fabs began construction in Sept 2022, but in March we heard that projected launch dates had been pushed back from 2025 to 2027/28.
