The Israeli government has approved to give Intel a $3.2 billion grant for its upcoming $25 billion chip plant in southern Israel, the largest investment ever made by a company in the country, both sides said on Tuesday. 

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SANTA CLARA, CA - APRIL 26: The Intel logo is displayed outside of the Intel headquarters on April 26, 2018 in Santa Clara, California. Intel will report first quarter earnings today after the closing bell.

Broader Strategy of Intel

According to CNBC, Intel's shares experienced a notable uptick of 1.9% at $48.90 during premarket Nasdaq trading. The US semiconductor giant is set to expand its operations at the Kiryat Gat site, which is approximately 42 km (26 miles) from the Hamas-controlled Gaza Strip. 

This move is pivotal to Intel's broader strategy to fortify its global supply chain resilience. The company, led by CEO Pat Gelsinger, is concurrently pursuing manufacturing investments in Europe and the US.

Amid intensifying competition with industry rivals AMD, Nvidia, and Samsung, Intel has embarked on an ambitious initiative to reclaim its prominence in chip manufacturing. 

The new Israeli plant is the latest in the series of substantial investments by the US chipmaker. Intel is allocating over 30 billion euros ($33 billion) to establish two chip-making facilities in Magdeburg, Germany, as part of its multi-billion-dollar investment drive in Europe.

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Israel and Intel

This development also follows Intel's commitment to invest up to $100 billion in constructing what could become the world's largest chip-making complex in Ohio. 

Similar investment plans to build chip-making plants in the US have also been unveiled by competitors Samsung and Taiwan Semiconductor Manufacturing Co. (TSMC). 

The Israeli government's generous financial backing of Intel's massive project aligns with the global competition to attract significant investments in the field of chips. The officials noted that the investment will directly benefit the country that will be significantly higher than the government's grant.

"This investment, at a time when Israel wages war against utter wickedness, a war in which good must defeat evil, is an investment in the right and righteous values that spell progress for humanity," said Israel's Finance Minister Bezalel Smotrich.

Besides the grant of 12.8% of the total investment, Intel has reportedly committed to buying 60 billion shekels ($16.6 billion) worth of goods and services from Israeli suppliers in the next decade. The new facility is expected to create thousands of jobs in Israel.

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