Israel Cancels $425 Million Intel Grant Amid Expansion Freeze in Kiryat Gat

Israel has canceled a planned grant of 1.3 billion shekels (approximately $425 million) to Intel for 2025 after the chipmaker froze its expansion plans at its Kiryat Gat facility. This development raises new uncertainties about the future of one of Intel's largest manufacturing sites outside the United States, although officials emphasize that the broader investment plan has not been canceled. According to the Ministry of Finance's State Budget Execution Report, the 2025 grant was fully canceled, but a 1.06 billion shekel (about $346 million) grant allocated for 2026 remains in the budget and has not been revoked.

Intel Israel stated that its plans are still under review, noting, "As previously announced, our expansion plans in Israel are currently being examined to ensure they align with customer demand." The uncertainty follows Intel's 2024 decision to freeze its manufacturing expansion in Kiryat Gat. In 2023, Intel had announced a planned $15 billion investment to build a new plant at the site, with the Israeli government committing to incentives totaling $3.2 billion. Under the agreement, Intel was also expected to purchase goods and services from Israeli suppliers worth tens of billions of shekels over the coming years.

Updated budget data indicate that while the government has not withdrawn its broad support for Intel, funding tied to investment milestones that were not met has not been disbursed. Nevertheless, Intel received one of the largest grants ever under Israel's Capital Investment Encouragement Law in 2024, amounting to 1.5 billion shekels ($490 million). Historically, the Kiryat Gat plant has been a major beneficiary of Israeli government support, receiving grants of 1.2 billion shekels ($300 million) in 2014 and 700 million shekels ($185 million) in 2018.