Intel Corporation constantly boasts about its chip foundry in Kiryat Gat, the only one in the world that produces chips using 10 nanometer technology, known as "Intel 7" technology, and says that the Israeli factory leads global AI processes of the company’s production sites around the world. The person responsible for the construction of the factory and for the replication of several of its processes to Intel’s global production network, Daniel Benatar, holds a senior position as general manager of Intel Worldwide Technology Front End Semiconductor Manufacturing.
For two years, however, construction of the extension to the Kiryat Gat factory, with the two clean rooms that it was supposed to contain, has been suspended, because of Intel’s cash flow difficulties, which also led to the cancellation of construction of factories in Germany and Poland, and because of the recurring wars in the Middle East.
Two years after the freeze on construction in Kiryat Gat, the Ministry of Finance Budgets Division has decided to cancel the grants promised to Intel in 2023 when Intel announced the expansion of the factory. The Ministry of Finance has cancelled a grant of NIS 1.3 billion that was due to Intel for work on the expansion in 2025, which did not occur, but at this stage has left in place a grant planned for the end of 2026 of NIS 1.06 billion, in case Intel goes back to investing in the factory.
In 2023, the Israeli government committed to NIS 11.1 billion in grants to Intel in return for the construction of a new chip foundry with two clean room next to the existing foundry in Kiryat Gat at a total investment of NIS 89 billion. The government, which at the time was being criticized by the technology industry over the judicial reform program, raised the grant percentage to 12.5% of the total investment in the factory and approved a 7.5% companies tax rate for Intel on its income from activity in the south of Israel. In June 2024, however, the company informed the contractors working on the project that it was freezing It until further notice. That notice has not yet been forthcoming, and while the factory in Israel is older and requires upgrading, it is Intel’s factory in Ireland, which already produces processors using newer five nanometer technology, that has become the beneficiary of new investment, amounting to €5 billion. Despite this, Intel received a grant of NIS 1.5 billion for its activity in 2024.
No comment was forthcoming from the Ministry of Finance. Intel stated in response: "As we have announced in the past, our expansion program in Israel is under review, in order to ensure that it will be in line with customer demand."
Published by Globes, Israel business news - en.globes.co.il - on July 26, 2026.
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