Intel is significantly expanding its production capacity in Israel and is receiving a $3.2 billion subsidy from the Israeli government.

Intel confirms to Reuters that it will build a new chip factory in Israel. Fab 38 will be based in Kiryat Gat, a city south of Tel Aviv, and will be operational by 2028. The total cost of the factory will be up to $25 billion.

The Israeli government is helping and giving Intel a $3.2 billion grant. To compensate, Intel will increase its taxes from five percent to 7.5 percent. According to Reuters, Intel chose this itself to receive a higher amount. The normal tax rate in Israel is 23 percent, so Intel can still count on a favorable tax rate.

The show must go on

The timing of the announcement will undoubtedly be a source of debate. The war in Gaza continues and the location of the new factory is just a stone’s throw from the war zone. However, Intel has had a strong presence in Israel for years and employs 12,000 people. That’s almost ten percent of the total employee base worldwide.

The chipmaker is busy with construction work to realize its ambitious ambitions. CEO Pat Gelsinger wants to make Intel the largest chip manufacturer again and has large resources for this. Intel is setting up new locations on several continents: In addition to Israel, there are also new factories in the USA and Germany, although the latter had a difficult start due to disputes with the government over subsidies. Intel not only wants to increase its own chip production, but also produce chips for other parties.