Late last year Intel announced massive plans to increase its global chip production capacities by upgrading, expanding, and equipping four of its fabs. As it turns out, the company is not going to stop there and is considering to build a brand new fab in Israel, which will cost $11 billion.

Moshe Kahlon, Israeli Finance Minister, on Tuesday confirmed that Intel had applied for a grant of about $1 billion from the government for its new investment plan to build a fab that would cost $11 billion. If everything goes as planned, the investment will not only be the biggest of its kind in Israel, but Intel will also build the largest semiconductor fab in the region. Furthermore, the expansion will add 1,000 new employees to Intel’s staff of approximately 13,000 in Israel.

“The moment the company comes to Israel and invests $10 billion, and it receives a grant of 9%, that means 91% of it stays here,” said Mr. Kahlon in an interview on Army Radio. “There are always such discounts, there are always incentives.”

Intel and Ministry of Finance reportedly started talks about the new fab several weeks ago, so the production facility is a few years away. In addition to securing incentives from the Israeli government, Intel will have to apply for permissions from various local authorities. That said, peculiarities of the fab as well as process technologies that it will use remain to be seen.

Since Intel is already investing in two fabs in the U.S. (Fab 42 in Arizona and D1X in Oregon), a fab in Ireland, and a fab in Israel, it is unlikely that Intel needs to start building another fab in Israel as soon as possible.

In addition to manufacturing operations, Intel also has rather vast R&D operations in Israel. The company develops CPU microarchitectures, Mobileye advanced driver-assistance systems (ADAS), RealSense 3D cameras, communication, and other technologies in the country. The addition of an advanced fab will clearly increase significance of Israel for Intel.

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Sources: Globes, Reuters

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  • Yojimbo - Wednesday, January 30, 2019 - link

    Process nodes are Intel's bread and butter. They messed up with 10nm. Intel is doing very well financially and their business has been very good. That shows you how strong of a position Intel is in such that they can have such a screw up and still have a very good business. Intel would have to really mess up to not have the money in 10 years. Their business might erode but it is not going to happen overnight.
  • zodiacfml - Wednesday, January 30, 2019 - link

    I agree. This is how Intel dominated the previous years since their last screw up, the Pentium 4.
    Hard to tell what is going on with Intel but I feel this is all intentional.
    They'd probably saved some money not investing for the latest lithography to fund their GPU R&D.
  • Samus - Wednesday, January 30, 2019 - link

    The easy answer: Israel is obviously giving them an exceptional deal to build there.
  • SquarePeg - Wednesday, January 30, 2019 - link

    Because Intel is getting hammered by AMD on one side and ARM on the other. Their process will right itself by shear R&D muscle and Intel needs to move to being a foundry first company so they can increase revenue by producing chips for third parties like Apple or Qualcomm ect.
  • FunBunny2 - Thursday, January 31, 2019 - link

    nah. remember: all of these "chip companies" actually get their tooling from ASML, et al, so none of them has any real advantage over the others. to the extent that Intel/AMD/ARM can invent a new architecture (not bloody likely), there's not much they can do. even if they did, wouldn't that mean a whole new fabrication process that looks nothing like today? and what happens, if/when, somebody figures out how to do deterministic computing with q quantum computer? assuming such can be built to scale?

    IOW, Intel etc. are at the mercy of external forces.
  • Zingam - Thursday, January 31, 2019 - link

    I guess they are going to employ Syrian refugees, right?
  • FunBunny2 - Thursday, January 31, 2019 - link

    ouch. or unemployed coal miners and open hearth furnace operators.
  • Gc - Thursday, January 31, 2019 - link

    Country-of-manufacture diversity. Suppose international politics moves away from free trade toward shifting, high tarriffs across certain borders. To adapt to shifting tarriffs, a multinational company needs diverse factory locations and flexible material flows that minimize costs including tarriffs. High tarriffs can be significant costs. A shift to a high tarriff can force a business to shutdown a factory located in an unfavorable place relative to its customers.
  • Notmyusualid - Friday, February 1, 2019 - link

    As I understand it, simply, they are not able to meet current customer demands, and thus need to expand manufacturing.

    Not a difficult concept, eh?
  • Old_Fogie_Late_Bloomer - Tuesday, January 29, 2019 - link

    I believe you mean "particulars of the fab".

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