Intel will spend $25 billion to expand manufacturing in Israel

Intel has set plans for a $25 billion manufacturing expansion in Israel, part of a string of announcements that lay out years of growth plans for the chipmaker’s factory network.

It’s “the largest investment ever by an international company in Israel,” Prime Minister Benjamin Netanyahu told a cabinet meeting Sunday, according to Reuters. Intel confirmed plans to expand in Israel, “driven by our commitment to meeting future manufacturing needs.”

Sunday’s announcement follows word Friday that Intel will spend $5 billion on an assembly-and-test plant in Poland. And reports suggest Intel will announce a deal for two long-awaited Germany factories on Monday.

CEO Pat Gelsinger is spending upwards of $80 billion to expand and modernize Intel’s factory network to accommodate new generations of manufacturing technology and, he hopes, renewed demand for its microprocessors. Gelsinger is also counting on Intel making high volumes of chips for other companies, part of the company’s new push into contract manufacturing.

Intel is already building new factories in Arizona and Ohio and had previously signaled plans to expand in Europe and Israel. The timing had been uncertain, though, as Intel pursued bigger government subsidies for its projects and coped with a steep downturn in chip demand that had prompted the chipmaker to dramatically cut spending and lay off workers.

Bloomberg reported that Israeli subsidies could cover nearly 13% of the project’s cost. The news service said Intel will pay a 7.5% tax rate, up from the 5% rate the chipmaker currently pays.

Plans announced Sunday call for Intel to begin production on the new Israeli plant in 2027.

Intel is Oregon’s largest corporate employer, with 22,000 workers in Washington County. The company engineers each new generation of its microprocessors in Hillsboro, then duplicates the manufacturing process developed there at factories around the world.

The Oregon Legislature approved a $210 million package of incentives for the chip industry in April and is near a deal for millions more in research tax credits. Intel has pushed hard for the incentives.

Intel has indicated it plans to expand its Hillsboro research factories eventually, and it wants to build a new lithography research lab in Oregon with financial support from the federal government.

— Mike Rogoway | | 503-294-7699

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