Intel Halts Israel Fab 38 Expansion as 2.89B RMB Subsidy Canceled

Israel has canceled approximately 2.89 billion RMB in government subsidies for Intel, marking a significant financial setback for the semiconductor giant's expansion plans in the region. This cancellation directly impacts Intel's ability to fund the construction of its new Fab 38 facility, which was intended to support advanced chip manufacturing. Investors should note that this pause in Intel's expansion in Israel may affect local supply chains and future production capacity.

Israel cancels 2.89 billion RMB in subsidies for Intel

The subsidy cuts target Intel's operations in Kiryat Gat, where the company maintains four R&D and manufacturing bases. These facilities include Fab 28, which operates on the Intel 7 process, and the planned Fab 38, which was central to the company's expansion vision. Halting the expansion reflects a reassessment of capital allocation for Intel's manufacturing network. Consequently, the anticipated increase in advanced node production from this site will not occur in the near term.

Intel laid off approximately 200 employees at the Kiryat Gat site in 2025 as part of workforce adjustments accompanying the expansion pause. Despite these reductions, the company expects its workforce in Israel to stabilize at around 8,500 employees. The cancellation of the 2025 subsidies does not affect the budget for 2026, where approximately 2.35 billion RMB in subsidies remains allocated. While immediate expansion funding is canceled, some government support for ongoing operations remains in the budget.

The stalled project, valued at 168.7 billion RMB, has been characterized by local media as an unfinished endeavor. The deferred investment represents a significant scale of capital that Intel has chosen to pause rather than cancel entirely. Intel faces challenges in aligning its manufacturing plans with current market demands and financial constraints. Stakeholders may observe how Intel adjusts its global manufacturing strategy in response to these regional changes.