Sami Peretz
HaaretzThu, 13 Jun 2024 14:25 UTC
© Bloomberg
Intel Corp is halting plans for a $25-billion factory in Israel, Israeli financial news website Calcalist said on Monday, in a report that the chipmaker did not confirm or deny.
The U.S. company, asked about the report, cited the need to adapt
big projects to changing timelines, without directly referring to the project.
"Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region," Intel said in a statement.
"Managing large-scale projects, especially in our industry, often involves adapting to changing timelines. Our decisions are based on business conditions, market dynamics and responsible capital management," it said.
Israel's government in December agreed to give Intel a
$3.2-billion grant to build the
$25-billion chip plant in southern Israel.
Intel has previously said that the factory proposed for its
Kiryat Gat site, where it has an existing chip plant, was an "important part of Intel's efforts to foster a more resilient global supply chain" alongside the company's investments in Europe and the United States.
Intel operates four development and production sites in Israel, including its manufacturing plant in Kiryat Gat called Fab 28. The factory produces Intel 7 technology, or 10-nanometer chips.
The planned Fab 38 plant was due to open in 2028 and operate through 2035. Intel employs nearly 12,000 people in Israel.
Comment: Is the Boycott, Divest, Sanctions campaign finally hitting the board rooms of the world?
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The world is losing patience with Israel's conduct in the Gaza war and taking steps - restricting exports, canceling professional confabs, backing down on planned business transactions and so on. Local consumers will suffer
The current Israeli government doesn't have a single accomplishment to its credit, only a long series of failures and damage inflicted on every possible front: diplomatic, security, economic and social. When the prime minister, the finance minister and the economy minister are asked what they are doing, say, to curb the appalling cost of living, they mumble something about the "what's good for Europe is good for Israel" reform, which will make it possible to rely on European standards without subjecting goods imported from the Continent to a bureaucratic Via Dolorosa
In March 2023, when the government approved the reform and the accompanying slogan, the ministers didn't imagine that a year later Israel would be coping with a tidal wave of European decisions that would damage the country's economy and its standing in the wake of a war in the Gaza Strip. In recent weeks, Israel has been hammered almost daily by a decision made abroad that eats away at what was known until recently as the "start-up nation" - a magnet for worldwide investments
Every such announcement comes on the heels of others, creating a feeling that multinational companies and European states think they need to punish Israel, or at least keep their distance from it.
On the diplomatic front, last week Spain, Norway and Ireland declared their recognition of a Palestinian state. Other European countries are considering their moves and could follow suit. In a particularly galling measure, the government of the Maldives stated that Israelis would no longer be allowed into the country, against the background of the Gaza war.
On the economic front, Turkish President Recep Tayyip Erdogan imposed a boycott on the export to Israel of both merchandise and raw materials. That was not surprising, in light of his hostility toward Israel. What was surprising was the decision by France to cancel Israel's participation in the Eurosatory 2024 arms and defense exhibition, slated to be held in Paris later this month, in protest of the Israel Defense Forces' operation in Rafah.
The event is one of the largest of its kind in Europe, and Israel's security companies have a lot to show off there at this time, when the Russia-Ukraine war is prompting many European countries to acquire advanced weapons. They also would have a large advantage stemming from the fact that their products are in use in the present war in Gaza, enabling them to demonstrate what the munitions can do in real time. War cabinet Minister Benny Gantz has urged France's prime minister, Gabriel Attal, to revoke the decision, which he characterized as "a prize to terrorism.
That sounds like a roundabout way of saying: We've gotten along without activity in Israel so far, and there's no reason to rile our Muslim clients in Europe. The chain had already faced criticism from pro-Palestinian groups, which demonstrated outside its branches in London and collected signatures on petitions calling for its boycott.
McDonald's, too, is dealing with a pro-Palestinian boycott that has cut into its sales across the world, according to its reports. In April, the global company, in a lightning transaction, acquired the chain's 225 branches in Israel from the franchisee, Omri Padan, who established the company's presence in Israel in 1993
In fact, the penetration of McDonald's into Israel was one of the harbingers of the end of the Arab boycott that Israel had coped with since its establishment. The chain's acquisition of its operations in Israel is intended to reduce friction with its Muslim clients internationally, in part to reduce McDonald's being identified with IDF soldiers and with the captives being held in Gaza.
After October 7, Padan had initiated an unprecedented campaign of a 50-percent reduction for soldiers in uniform at all the chain's local branches - thus stepping up the pressure on the global network. It's thought that after the new transaction is completed, McDonald's will cut back or cancel the discount, in the hope of allaying the criticism and the international boycott of the chain.
High-tech too - the flagship of Israel's economy - has faced difficulties stemming from the war. In this case, however, the situation is not perceived as a boycott but as a temporary lowering of profile by foreign investors until the fighting ends. According to data presented last week by the governor of the Bank of Israel, Prof. Amir Yaron, the amount of capital raised in the second quarter of 2024 will total $3.5 billion, representing a significant increase compared to the past six quarters, when the average amount of capital raised per quarter stood at $2 billion. The continuation of this trend is critical for the Israeli economy during a period in which the country is being viewed ever more negatively.
The boycotts will have a long-term effect on the cost of living and on competitiveness. We have already seen price rises in recent months in reaction to the war - El Al jacking up ticket costs when foreign carriers stopped flying to Israel; shipping rates rising due to the Houthi missile threat; an uptick in real estate and produce prices because of a shortage of construction and agriculture workers; and even the fact that fewer Israelis are traveling abroad, raising demand for everything at home. All of the preceding has been compounded by a distracted government that is failing to address the cost-of-living issue. If the boycott expands, Israeli consumers will only feel it deeper in their pocket,
What's good for Europe just now, is less good for Israel
Comment: Is the Boycott, Divest, Sanctions campaign finally hitting the board rooms of the world?
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