Nearly three years after the grand reveal of one of Israel's biggest investment deals, the situation has changed sharply. The new facility next to Intel's Kiryat Gat site remains unbuilt, output growth stays on hold, and a major promised grant has now been withdrawn.

Finance Ministry budget records show the full cancellation of a NIS 1.3 billion payment set for 2025. Officials acted after Intel paused its Kiryat Gat growth and skipped the investment steps outlined in the state contract.

The withdrawn sum formed part of a June 2023 pact in which Intel pledged roughly $25 billion for Kiryat Gat upgrades. The state offered grants equal to 12.8 percent of that total and raised the firm's corporate tax from 5 percent to 7.5 percent. Leaders at the time hailed the deal as strong proof of faith in Israel's economy.

Less than twelve months later, Intel told contractors the work would pause until further notice. No restart has occurred. At the same time, Intel halted or scrapped other projects in Germany and Poland while managing its chip-industry challenges. Its Ireland site, however, gained a fresh commitment of about 5 billion euros.

Budget data confirm the 2025 grant vanished entirely. A separate NIS 1.06 billion line still sits in the 2026 budget, kept in place in hopes that Israeli investment will resume. Continued delay could remove that sum as well.

Economy Ministry sources told Walla on Sunday that nothing has shifted, stating broadly that no new developments, cancellations, or halts have taken place.

Even with the pause, Intel collected a NIS 1.5 billion grant in 2024, one of the largest ever issued under the capital investment law. An Adva Center review found this sum made up nearly 80 percent of that year's entire budget for investment and job support.

Intel remains the top recipient of such grants. Over the past ten years the company has received roughly NIS 3.6 billion in aid plus sizable tax breaks. In return it pledged to invest locally, grow operations, and buy goods and services from Israeli suppliers.

It is still unclear how the grant removal will affect the overall agreement, whether prior payments must be returned, or what will happen to the 2026 allocation. The outlook for the Kiryat Gat expansion itself is also unknown.

Intel's finances show early signs of recovery. The firm reported a 60 percent rise in second-quarter 2026 revenue to $16.1 billion, fueled by strong demand for artificial-intelligence and data-center chips. The company has still carried out large layoffs in recent years, cutting its Israeli workforce from about 12,000 to roughly 9,000.

Intel: Expansion plan in Israel remains under review

The Finance Ministry said it continues to follow the terms of the agreement with Intel.

Intel said its Israel expansion plan is still under review to match customer demand.