Intel Cancels Supplier Contracts Amid Expansion Plans for New Factory in Israel

Intel's suppliers recently received notices of contract cancellations, halting equipment and material supplies for the expansion of the company's new factory. The Ministry of Finance was aware of Intel's decision to halt the expansion.

The expansion, announced officially in December, was set to involve a staggering $25 billion investment. As part of an agreement with the state, Intel was slated to receive incentives worth 3.2 billion shekels while committing to purchasing products and services totaling 60 billion shekels from Israeli suppliers over the next decade.

Power Plant Construction Plans

Reports surfaced in March indicating that OFC, under Idan Ofer's control, was expected to construct a power plant for Intel in Kiryat Gat, with an investment of up to $900 million. If finalized, the construction is set for 2026, with OPC supplying electricity for 20 years.

Intel Executives Relocating

Several senior executives at Intel Israel have relocated to a factory being established in Ohio as part of an American initiative to encourage chip factory establishment in the country.

Intel maintained that Israel remains a crucial site for manufacturing and R&D. The company attributed changes in expansion plans to evolving business conditions and market dynamics, stressing the complexity of managing such large-scale projects in the industry.

Government Assurance

Senior Treasury officials involved in the Intel deal affirmed that there are no changes planned for Intel's investment in Israel or the grants the government is expected to provide. The Ministry of Finance reached out to Intel following media reports, with the company clarifying that the contract changes with a supplier do not imply alterations to the overall project timeline or investment commitment.