Israeli government has agreed to offer a grant of $3.2bn to Intel for the expansion of chip manufacturing plant in the southern part of the country.

This financial commitment was announced by Israeli officials in June but had not been confirmed by Intel until now.

The expanded facility, which will be in Kiryat Gat, will be built with a total investment of $25bn.

In a statement, as reported by the Times of Israel, Intel said: “The expansion plan for the Kiryat Gat site is an important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States.”

“The timing, which comes as the world is highly competing for chip investments, is a significant vote of confidence in Israel’s economy,” the Israeli finance ministry was quoted by Bloomberg as saying.

Intel has also pledged to procure NIS60bn ($16.5bn) worth of goods and services from Israeli suppliers over the coming ten years, alongside creating several thousand jobs at the manufacturing site in return for the government’s support.

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The expanded Kiryat Gat facility is expected to commence operations by 2028 and continue until at least 2035.

Intel has revealed that construction, including clean rooms and support structures, is already underway, with significant progress made on foundational elements.

The US-based company has been producing semiconductors in Israel for over two decades. With 11,700 employees, its presence in Israel is already significant.

The expansion is part of a broader strategy by the company, which has announced substantial investments in global facilities.

These include €30bn ($33.13bn) earmarked for semiconductor fabrication facilities in Germany and a $4.6bn investment in a semiconductor assembly and test site in Poland.