Intel has reportedly postponed construction on its $25 billion semiconductor manufacturing plant in Kiryat Gat, Israel.

According to reports in local Israeli media, Intel’s suppliers received notice this week that contracts for the supply of equipment and materials had been canceled. One report from Calcalistech said Israel’s Ministry of Finance was aware of the decision to stop construction of the plant.

Intel has been operating in Israel since 1974 and currently has four development and production sites in the country. The company’s existing Fab 28 facility in Kiryat Gat produces 10nm chips and employs 11,700 workers and at the start of 2024, Intel announced it had secured a $3.2 billion grant from the Israeli government to expand its chip manufacturing plant in the city.

The company secured the funding from the government by pledging to acquire $16.5bn worth of goods and services from Israeli suppliers over the next decade.

In a statement to DCD, Intel said: “Israel continues to be one of our key global manufacturing and R&D sites and we remain fully committed to the region. As we’ve previously noted, the scope and pace of Intel’s manufacturing expansion at our sites around the world depends heavily on various factors. 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.”

In September 2023, Intel pulled out of plans to acquire Israel’s Tower Semiconductor for $5.4bn amidst pushback from regulators. Instead of the acquisition, the two companies struck a deal that saw Tower invest up to $300 million to “acquire and own equipment and other fixed assets” at Intel Foundry Services' New Mexico fabrication plant.