Intel halts work on construction of Israel wafer fab
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Contractors working on the construction of Fab 38, Intel’s next wafer fab at its Kiryat Gat campus in Israel, have been told to stop work, according to local news reports.
Intel announced the plan to make a $25 billion investment with a capability to initially run 2nm manufacturing process technology was made in December 2023 along with news of a US$3.2 billion subsidy from the Israeli government. The facility was planned to start running wafers in 2028 and is part of a significant investment by Intel in the country. Currently, Intel’s operational fab in Kiryat Gat is Fab 28, which produces 10nm chips.
Local reports say that some suppliers of equipment and materials have had their contracts cancelled. But the same reports also quoted Ministry of Finance officials saying that there is no change to Intel’s planned investment in Israel and that the latest developments are just contractual changes.
Intel is quoted saying in a statement: “Israel continues to be one of our key global manufacturing and R&D sites, and we continue to be committed to the region. As mentioned previously, the scope and rate of expansion of Intel’s production at the company’s sites around the world depends on a number of changing factors. Managing a project of this magnitude, especially in our industry, usually involves schedule adjustments. Our decisions are based on business conditions, market dynamics and responsibility in capital management.”
Given that wafer production is not expected before 2028 Israel has scope to modulate the rate of development at Kiryat Gat. However, some observers in Israel are concerned that the conflict in Gaza maybe causing inward investors to have second thoughts.
It is also notable that Intel recently announced a deal under which Apollo-managed funds and affiliates will lead an investment of US$11 billion to acquire a 49 percent equity stake in a joint venture entity related to Intel’s Fab 34 in Leixlip, Ireland.
The transaction represents Intel’s second Semiconductor Co-Investment Program (SCIP) arrangement.
It is possible that until Intel has released funds from these deals, or cut a similar one for Kiryat Gat, it is reluctant to continue putting capital into the Israel site. It also has extensive fab construction commitments in
Related links and articles:
News articles:
Intel in US$25 billion Israel 2nm fab expansion
Intel sells off half its Irish fab for US$11 billion
Intel plans US$25 billion Israel wafer fab spend
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