Intel Reportedly Postpones Development of $25 Billion Chip-Manufacturing Plant in Israel

By Trisha Andrada

Jun 12, 2024 07:01 AM EDT

An Intel sign is displayed in front of the Intel company headquarters July 15, 2008 in Santa Clara, California. (Photo : Justin Sullivan/Getty Images)

Intel is reportedly planning to pace its multi-billion-dollar investments in facilities planned globally, which would delay the development of its $25 billion chip manufacturing factory in Israel.

Short Delay in Intel's Plans

According to unnamed insiders who talked to Bloomberg, Intel's plan delay is just temporary. The firm reportedly notified a few suppliers of the delay last month through a letter.

Nevertheless, an Intel spokesperson guaranteed that the tech giant is still very much invested in Israel and the region. They pointed out that one of the challenges of managing a project of this magnitude is dealing with unexpected delays.

The representative also said the company bases its judgments on current business situations, market dynamics, and appropriate cash management.

Intel CEO Pat Gelsinger is trying to control expenses via a "Smart Capital" program and is actively seeking external financing for new projects. These initiatives may cost tens of billions of dollars and span many years.

The deal to sell Intel's 49% ownership in its Irish facility to a private equity firm for $11 billion was announced earlier this month.

READ NEXT: Intel Partners with Apollo Global, Selling Stake in Irish Plant for $11 Billion

Increasing Manufacturing Capacity

Last year, Intel revealed its intentions for the manufacturing facility. The Israeli government is providing $3.2 billion in incentives to help finance it, as reported by Al Jazeera.

The business is betting on increased manufacturing capacity to entice more customers who want to manufacture their designs in Intel's facilities. Gelsinger is confident that this approach will propel Intel back to the top of the chip market.

The Israeli government requested Intel run the facility until at least 2035, with a start date of 2028. Intel will spend an additional 60 billion shekels, or $16.2 billion, with Israeli suppliers over the next ten years.

READ MORE: Intel Launches New AI Chips for Data Centers Following Recent Releases From Rivals Nvidia, AMD

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