intel intends to build a new factory in Kiryat Gat with an investment of 25 billion dollars

The Ministry of Finance announced that agreements in principle had been received for Intel to build a new factory in Kiryat Gat with an investment of 25 billion dollars. According to the ministry's statement, Intel "is expected to hire thousands of additional workers in Kiryat Gat. It was agreed to significantly increase the tax rate that the company will pay to the state from 5% today to 7.5%. As part of its commitments, Intel is expected to finish the investment and start the plant's operations by 2027 and continue to operate it until at least 2035." Intel will receive a grant of 3 billion dollars for the establishment of the new plant.
The announcement comes after the Minister of Finance, Bezalel Smotrich, and the Commissioner for Budgets, Yogev Gerdos, informed the Prime Minister, Binyamin Netanyahu, and the Minister of the Economy, Nir Barkat, that the negotiations conducted between the company and the professional ranks in the Budget Division of the Ministry of Finance have been successfully concluded and agreements in principle have been reached regarding for company programs.
"As part of the summaries, an agreement in principle was given to give Intel a grant to carry out the investment pursuant to the law to encourage capital investments in the amount of 12.8% of the amount of the investment. The company's obligations to meet the goals are a condition for receiving the grant. After the agreement in principle, the formal approval process will begin, which is expected to take several weeks," it said.
The announcement on behalf of the Ministry of Finance was published to the public without coordination with Intel. The American company itself has not yet officially announced its plans in this regard. Also, the announcement about the grant was published when Intel had not yet finished building the new factory in Kiryat Gat, which it committed to back in 2019. The construction of this plant, which is supposed to produce chips with the latest technologies, began considerably late compared to Intel's original commitments. The amount of the grant that the state promised to Intel in 2019 was about 9% of the investment.
Last February it was published in TheMarker that Intel is considering future investment and the establishment of a new plant and is conducting talks with the state, even though a meeting with the Prime Minister was postponed due to Intel's concern that government officials would make political use of these talks, against the background of the widespread protest against the coup d'état. Some in the government believed that Intel did not meet the previous investment conditions from 2019, and therefore there is no justification to grant it an additional tax benefit.
Although Intel is in a difficult period of declining revenues and profits, it is also in an unprecedented boom of huge investments and building factories all over the world, and it is asking for extensive subsidies and grants from the countries in which it operates, including in the US and Europe. At the end of the week it announced the establishment of a new factory in Poland with an investment of 4.6 billion dollars, and is currently in advanced talks with the German government to establish a large plant there as well.
Last week, Intel reported that the company employs 11,700 people in its three development centers (in Haifa, Jerusalem and Petah Tikva), and in its production center in Kiryat Gat. This is a decrease of about 300 employees compared to the figure in the report published a year ago, when the company employed 12 thousand people (not including Mobileye employees). According to the report, Intel's exports recorded a record of 8.7 billion dollars - 1.75% of the GDP of Israel, and 5.5% of Israeli high-tech exports in 2022 (compared to $8.1 billion in 2021).