Intel suspends $15 billion factory expansion in Israel amid Gaza war

Intel is halting the expansion of a major factory project in Israel, which was going to invest an extra $15 billion in a chip plant.

The chip giant in December said it was going to expand an ongoing $10 billion plan at a site in Kiryat Gat site, in the south of the country, currently under construction but this appears to have been shelved now.

Intel did not give any reason for the halt to construction.

"Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region," the company said in a statement.

It added that "managing large-scale projects, especially in our industry, often involves adapting to changing timelines."

"Decisions are based on business conditions, market dynamics and responsible capital management."

Israel is Intel's third-largest country of operation by asset size, according to its annual report, after the United States and Ireland. The semiconductor giant has been present in Israel for fifty years.

During the 2010s, Intel became the leading employer in Israel's tech sector, according to the company's website.

In March, the Boycott, Divestment, and Sanctions movement (BDS), launched a #BoycottIntel! campaign, calling on supporters to boycott the US tech giant over its plans to invest in Israel as it continued to kill scores of Palestinians in Gaza every day.

The campaign also sought to pressure Intel stock and major institutions to exclude Intel from their tenders.

"Intel has been aiding and abetting Israel’s apartheid for decades, and now it is directly feeding its war chest while it continues its unspeakable genocide against 2.3 million Palestinians in the occupied and besieged Gaza Strip," a BDS spokesperson said at the time.

"Intel is complicit in Israel’s genocide and its underlying system of apartheid. Intel’s M.O. seems to be, ‘Make Apartheid Great Again!’”

The latest move by Intel follows tech giant Samsung Next, which announced in April that it had shut down its operations in Israel and shifted its activities abroad.

The firm, which is the innovation branch of Korean company Samsung, announced to staff it was closing its operations in Tel Aviv, a regional tech hub.

It comes after a flurry of difficulties for the Israeli economy since the 7 October attacks and war on Gaza, including in the tech sector.

Warnings over Israel's growth have persisted since the start of its war on Gaza, with the economy contracting by almost 20 percent in annualised terms in the last quarter of 2023.

In January, the Central Bank cut interest rates in a bid to support both businesses and households through the war.

Credit ratings agency Fitch Ratings said that while Israel's "rating watch negative" status had been removed, it still held a negative ratings outlook on the country.

This "reflects the combination of uncertainties around the fiscal trajectory and the war's duration and intensity, including the risk of regional escalation", the firm clarified.