Intel expansion uncertainty grows as Israel does not transfer $425 million grant
The Finance Ministry’s budget report shows the 2025 payment was canceled after Intel paused its planned $15 billion Kiryat Gat expansion, while the company says its investment plans in Israel remain under review.
Israel canceled a planned NIS 1.3 billion ($425 million) grant to Intel for 2025 after the chipmaker froze its Kiryat Gat expansion plans, according to state budget execution data. The move raises new questions about the future of one of Intel’s largest manufacturing sites outside the U.S., although officials insist the broader investment plan has not been canceled.
According to the Finance Ministry Accountant General Department’s State Budget Execution Report, the grant allocated to Intel for 2025 was fully canceled.
However, the situation remains unclear. A further NIS 1.06 billion ($346 million) grant allocated for 2026 still appears in the state budget and has not been canceled.
Intel Israel said that the company’s plans remain under evaluation.
“As we previously announced, our expansion plans in Israel are currently under review to ensure they align with customer demand,” the company said.
The uncertainty follows Intel’s decision from 2024 to freeze plans for expanding its Kiryat Gat manufacturing operations. The company had announced a planned $15 billion investment in a new factory at the site in 2023, with the Israeli government committing a $3.2 billion incentive package in return.
Under the agreement, Intel was also expected to purchase tens of billions of shekels worth of goods and services from Israeli suppliers over the coming years.
The latest budget data suggests that while the government has not withdrawn its broader support for Intel, funding tied to investment milestones that were not completed has not been transferred.
Intel nevertheless received one of the largest grants ever awarded under Israel’s Law for the Encouragement of Capital Investments in 2024, when it was allocated NIS 1.5 billion ($490 million).
Over the years, the Kiryat Gat facility has been one of the largest recipients of Israeli government support. In 2014, Intel received a NIS 1.2 billion ($300 million) grant, followed by a NIS 700 million ($185 million) grant in 2018.
