Intel Corp. has agreed in principle to build a new manufacturing plant in Israel, part of a push by the US semiconductor giant and its chip peers to diversify their production sources. The preliminary deal was announced by Israel’s finance ministry and Prime Minister Benjamin Netanyahu on Sunday. Intel confirmed the company’s “intention to expand manufacturing capacity in Israel,” where it is already active, but didn’t specify the terms or provide other details.

Based on someone familiar with the plans who was not authorised to speak publicly, the facility will be for wafer fabrication, a category in which Israel is currently one of Intel's four key producers. The increase will support Intel CEO Pat Gelsinger's efforts to locate more manufacturing outside of Asia, which currently dominates chip production. He is also attempting to reestablish the chip pioneer's technological leadership after firms such as Nvidia Corp. and Taiwan Semiconductor Manufacturing Co. outperformed it.

While Netanyahu described the transaction as the largest foreign investment in Israel and a "expression of confidence" in the country's economy, a person familiar with the matter stated the amount includes a prior, $10 billion investment announced in 2021.