Against the background of the reform to Israel’s judicial system that the government is advancing, Intel Israel has asked to postpone a meeting between its production teams and teams from the Ministry of the Economy and the Ministry of Finance, fearing that politicians could make use of such a meeting for their own ends. Intel wishes to distance itself from the controversy over the judicial reforms, and not to become a factor in it.
Intel had sought to meet representatives of the new government in order to begin discussions about upgrading its production facilities. The company is currently holding discussions with governments elsewhere, such as in Germany and in the state of Ohio in the US. The aim was to examine possibilities for obtaining government grants and tax benefits from the Israeli government to support investment in Israel of over $20 billion by the US semiconductor giant.
Every few years, Intel, like other semiconductor manufacturers, has to upgrade its production facilities or build new ones in order to produce microchips using newer technology. The cost of doing so is ever increasing. The new fab currently under construction in Kiryat Gat, Fab 38, needs at least ten machines for producing microchips using extreme ultraviolet lithography (EUV). Each machine costs $150-200 million. The last time that the state made a commitment to Intel was in 2019, when Intel received benefits worth NIS 3.2 billion in return for constructing a fab at an investment of $10 billion.
The new CHIPS and Science Act in the US and incentive programs of the EU, together with the political instability in Israel and the protests against the government, put Intel Israel on a difficult spot, and give Intel Corporation’s global management further reasons to choose Germany, Ireland or the US as the place for its next fabs.
Intel declined to comment on the report.
Published by Globes, Israel business news - en.globes.co.il - on February 13, 2023.
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