Intel will invest over $50 billion in Germany and Israel to build chip plants

Intel manufacturing plant
(Image credit: Intel)

What you need to know

  • Intel has invested $33 billion in Germany to build two chip plants.
  • The company is also investing $25 billion in Israel to build a new factory.
  • Intel's goal is to diversify its area of operations to avoid the shortage of semiconductors, as experienced during the COVID-19 pandemic.

Intel and Germany have signed a new deal that will see the company invest $33 billion, according to a report by Reuters. The investment, cited as "Germany's biggest ever foreign investment," will be used to construct two chip factories in Magdeburg, Saxony-Anhalt, as part of Intel's commitment to expanding its reach across Europe. In 2021, the company also announced its plans to start producing chips for other companies.

The deal has been in the works for several months. Germany will have to pay €10 billion in subsidies to attract the lucrative deal. The German government rejected Intel's initial ask of €10 billion and made a €6.8 billion counter. Intel again turned down the offer, citing that it was too little. But now, both parties have reached a common ground. 

Today's agreement is an important step for Germany as a high-tech production location – and for our resilience. With this investment, we are catching up technologically with the world's best and expanding our own capacities for the ecosystem development and production of microchips.

Olaf Scholz, German Deal Chancellor

Intel's subsidy request is in place to cater to the labor cost. During the COVID-19 pandemic, the world experienced a shortage of semiconductors because of the over-reliance on Asian manufacturing. However, the US and Europe are looking to remedy the situation by creating more avenues to source these materials. 

The company's first facility in Magdeburg is expected to start operations in the next 4 to 5 years once the European Commission green-lights the subsidy package. Intel added that over 7,000 people will get jobs through this initiative alongside 3,000 high-tech jobs at Intel. What's more, tens of thousands of employment opportunities will also be created across the industry. 

Germany is also in the midst of talks with both Taiwan’s TSMC and Sweden’s Northvolt, which will see even more development come to the country. 

Alongside this deal, Intel is in the middle of talks with Israel. The deal, still in “preliminary,” will see Intel invest $25 billion in a bid to diversify its area of operations. The investment will be used to build a new factory that will be situated in Kiryat Gat, south of Tel Aviv.

Operations are expected to kick off in 2027 and go through to 2035, when Intel will be expected to pay more tax for the deal, which is 7.5% compared to the usual 5%. However, the company will receive a substantial grant from the Israeli government, translating to 12.8% of the total amount invested.

Intel’s decision to invest in Israel is an expression of confidence in the Israeli economy at a time of global uncertainty. The unprecedentedly large investment will affect the growth of the Israeli economy in the coming years and advance quality employment.

Bezalel Smotrich, Finance Minister

Intel's investment in Israel is geared toward ensuring that the company can satisfy future manufacturing needs while simultaneously creating more support for its IDM 2.0 strategy.

Our intention to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs ... and we appreciate the continued support of the Israeli government


In the interim, Intel has already flagged off some of its projects, such as Arizona's $20 billion chip factories.

Additionally, as part of Intel's expansion of its chip production, the company also announced plans for a mega-site chip factory in Ohio which could take up to $100 billion in investments on top of the initial $20 billion investment. Production on the 1,000-acre site was slated to start in 2025. Intel's CEO, Pat Gelsinger, highlighted that they expect this investment to be the largest silicon manufacturing location on the planet.

By 2030, the chip manufacturing industry is supposed to become a trillion-dollar venture, this is after it expanded from $600 billion in 2021.

Kevin Okemwa

Kevin Okemwa is a seasoned tech journalist based in Nairobi, Kenya with lots of experience covering the latest trends and developments in the industry. With a passion for innovation and a keen eye for detail, he has written for leading publications such as OnMSFT, MakeUseOf, and Windows Report, providing insightful analysis and breaking news on everything revolving around the Microsoft ecosystem. While AFK and not busy following the ever-emerging trends in tech, you can find him exploring the world or listening to music.

  • naddy69
    I assume these plants will be building more than just Intel chips. With Windows PCs demand in constant decline, more Intel CPUs are not needed.

    Ah yes, from a linked article: “The unit will produce ARM, x86, and RISC-V core chips for other companies.”

    Smart move for Intel. Time to diversify.
  • GraniteStateColin
    naddy69 said:
    I assume these plants will be building more than just Intel chips. With Windows PCs demand in constant decline, more Intel CPUs are not needed.

    Ah yes, from a linked article: “The unit will produce ARM, x86, and RISC-V core chips for other companies.”

    Smart move for Intel. Time to diversify.

    PC demand is only in decline compared with boosted pandemic levels that nearly doubled pre-pandemic sales rates. Not that it's a growth industry, but sales have been relatively flat other than that spike for the past 10 years (at about 13 million units per quarter in the US). I wouldn't be surprised if there is a temporary dip below pandemic levels as all those new computers reduce the need for new purchases below what would have otherwise occurred, but so far, there's no data to prove that's happening, with latest sales still being above the average of the 5 years leading up to the pandemic. The next 3 quarters will be telling.