Intel interrupts work on $25B Israel fab, citing need for ‘responsible capital management’

Construction work on Intel’s $25 billion semiconductor manufacturing plant in Kiryat Gat, Israel, has reportedly been postponed.

According to Israeli media [in Hebrew], Intel has asked an infrastructure construction firm to pause work on the project.

In a statement to The Register on Monday, the x86 giant reaffirmed its commitment to Israel, where the biz employs nearly 12,000 workers, explaining that projects of this scope have many dependencies that delay work. Which is a fancy way of saying: Yes, the project’s been paused.

“Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region. As we’ve previously noted, the scope and pace of Intel’s manufacturing expansion at our sites around the world depends heavily on various factors,” the chip giant explained.

“Managing large-scale projects, especially in our industry, often involves adapting to changing timelines. Our decisions are based on business conditions, market dynamics and responsible capital management.”

It isn’t clear how long the project will remain on hold. Intel’s comment regarding capital management suggests it may be stalling while figuring out how to pay for the project. Intel has relied on private equity from the likes of Brookfield Asset Management and Apollo Global Management to help finance some of its fab projects.

News of the delay comes less than six months after Intel revealed its plans to expand fab operations in Israel. The $25 billion project was slated to receive $3.2 billion in government subsidies and “foster a more resilient global supply chain.”

The site is one of several fab projects announced by Intel following former-VMware CEO Pat Gelsinger’s return to Chipzilla as chief exec in early 2021. To date Intel has committed to spending more than $100 billion to establish itself as the number two foundry, behind TSMC, by 2030.

The plans include fab expansions in Arizona, New Mexico, Oregon, and Ireland, plus new facilities in Ohio and Germany.

The decision to pause work on the Israeli fab – which was reportedly already under construction – comes roughly a year and a half after Intel abandoned its plans to build a luxury research and development complex in the Israeli city of Haifa.

The $200 million facility was slated to include creature comforts such as outdoor sports fields, green areas, pop-up restaurants, and even a rooftop health center and spa. However, the project was later reimagined as a parking lot, with the cash redirected to fuelling Intel’s foundry push. ®