Chip Wars: Intel All Set To Invest $25 Billion In Israel, To Challenge TSMC

Intel has reached a preliminary agreement to invest around $25 billion in a new chipmaking factory in Israel, according to Prime Minister Benjamin Netanyahu.

The US semiconductor company, which has been operating in Israel since 1974, stated that it had submitted a business plan to upgrade its existing manufacturing facilities in the country.

This additional investment follows Intel's announcement two years ago of a $10 billion expansion plan, marking a series of significant projects aimed at strengthening its manufacturing capabilities and competing with Taiwan's TSMC.

The new factory, to be located in Kiryat Gat where Intel already has a facility, is touted as the largest investment ever made in Israel.

Intel is also engaged in discussions with Germany to increase subsidies for a €20 billion plant in Magdeburg. Furthermore, the company has recently revealed investments exceeding $50 billion in building new sites or expanding existing manufacturing facilities in Ohio, Arizona, and Ireland.

Additionally, Intel plans to construct a $4.6 billion semiconductor assembly and testing plant in Poland and is exploring the possibility of a similar facility in Italy.

These expansion initiatives come at a time when Intel has faced a significant downturn in demand, impacting its finances. The company is also under scrutiny regarding its ability to keep pace with the growing demand for chips used in artificial intelligence, particularly with respect to new manufacturing processes and chip designs.

As a result, Intel has indicated that it may delay some of its investments, focusing on constructing the buildings for the new facilities and deferring the costlier equipment installation until there is more clarity on the rebound of demand.

Intel emphasised its commitment to meeting future manufacturing needs and expressed appreciation for the support of the Israeli government.

Netanyahu regarded Intel's investment as a testament to the strength of the Israeli economy, highlighting its free market principles and technological advancements.

The Israeli finance ministry expects the project to create numerous job opportunities. As part of the agreement, Intel will be subject to a local tax rate of 7.5 per cent, up from the current rate of 5 per cent.