After receiving US$3.2 billion in government grants from Israel, Intel began the construction of Fab 38 in Kiryat Gat near Gaza in a show of confidence in Israel amid Intel's production expansion worldwide.
According to the Times of Israel, Al Jazeera, and Reuters, the Israeli government agreed to provide Intel with a US$3.2 billion grant for the chipmaker to build a US$25 billion Fab 38 in Kiryat Gat, the most substantial investment by a company in Israel.
Intel said in a statement that the expansion plan for Fab 38 is an important part of Intel's efforts to foster a more resilient global supply chain, alongside the company's ongoing and planned manufacturing investments in Europe and the US. Intels' facilities in Israel, including Fab 28 and Fab 38, are a couple of miles away from the Gaza border.
Besides the US$3.2 billion government grant, Intel pledged to purchase goods and services totaling NIS60 billion (US$16.6 billion) from Israeli suppliers in the coming ten years. Intel makes chips on the Intel 7 process node in Fab 28, but the chipmaker did not mention what technologies it plans to introduce in Fab 38. Fab 38 is expected to start operation in 2028, generating thousands of jobs, and operate at least through 2035.
Intel Vice President Daniel Benatar said that support from the Israeli government will ensure that Israel remains a global center of semiconductor technology and talent.
Over the past 50 years, Intel received about US$2 billion in grants from the Israeli government. Intel will pay a corporate tax rate of 7.5% instead of 5% previously, still lower than the typical rate of 23%.
Intel said in its annual report that the company is expanding manufacturing capacity across multiple sites, including Arizona, Ireland, Israel, Oregon, New Mexico, and Malaysia for advanced packaging. Intel also plans to invest in two fabs in Germany and an assembly and testing facility in Poland.
Source: Intel, Jan 2023
