Israel Cancels $425 Million Intel Grant Amid Uncertainty Over Expansion Plans

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 questions about the future of one of Intel's largest manufacturing sites outside the United States, although officials maintain that the broader investment plan has not been canceled. According to the State Budget Execution Report from the Accountant General's Department at the Ministry of Finance, the 2025 grant was fully canceled, but a separate grant of 1.06 billion shekels (about $346 million) allocated for 2026 remains in the budget and has not been revoked.

Intel Israel stated that its expansion plans are still under review, noting, "As we have 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 announced a planned $15 billion investment to build a new plant at the site, with the Israeli government committing a $3.2 billion incentive package in return. The agreement also included Intel's commitment to purchase tens of billions of shekels worth of goods and services from Israeli suppliers 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Updated budget data indicate that while the government has not withdrawn its broad support for Intel, funding tied to investment milestones that were not met has not been disbursed. Despite this, 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.