Intel’s Kiryat Gat Cuts Signal Deepening Crisis for Israel’s Tech Manufacturing Hub

A Historic Stronghold Faces Harsh Reality Amid Global Restructuring

Intel’s latest wave of layoffs has reached a once-untouchable pillar of its Israeli operations: the Kiryat Gat manufacturing plant. In a significant escalation of ongoing cost-cutting measures, the chip giant has begun issuing pink slips not only to its research and development (R\&D) teams in Haifa and Petah Tikva but now also to the Kiryat Gat production facility—home to nearly half of Intel Israel’s workforce. This development marks a pivotal moment in the reshaping of the country’s semiconductor sector, once buoyed by billions in government support and global demand.

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Intel Israel has initiated a fresh round of layoffs that, for the first time, include employees from its Kiryat Gat manufacturing facility. Historically exempt from job cuts due to its strategic importance and government backing, the site now finds itself swept into Intel’s global restructuring strategy. According to estimates, several hundred employees will be laid off at this stage, with Intel Israel offering no public comment on the matter.

Currently, Intel employs around 9,300 people in Israel, with approximately 4,000 working in Kiryat Gat. Past layoff rounds focused mostly on R\&D centers in Haifa and Petah Tikva, as well as operations like Intel Ignite and Granulate, a startup acquired in 2022 and now shuttered. Kiryat Gat had previously been a beneficiary of generous state incentives—receiving a \$3.2 billion grant in 2023 for a new plant, along with earlier grants of \$185 million in 2018 and \$300 million in 2014.

Despite this support, the Kiryat Gat facility, including its Fab28 and Fab28A lines, is now considered technologically behind. These plants still produce chips using 7nm and 10nm nodes, while competitors globally are advancing toward 3nm and even 2nm processes. Intel has yet to confirm whether its new Fab38 site—currently under construction next to the older plants—will proceed as planned or face delays.

Globally, Intel has laid off over 20,000 employees since 2022, with CEO Lip-Bu Tan signaling that more cuts could follow in 2025. In Israel, 1,000 jobs were lost in 2023, and this second wave in 2025 could impact several hundred more.

What Undercode Say:

Intel’s decision to extend layoffs to its flagship Kiryat Gat plant reflects more than just internal belt-tightening—it’s a stark signal that even decades-long industrial bedrocks are not immune to global tech volatility. The once-protected facility, held up by state subsidies and strategic value, has become collateral damage in Intel’s urgent effort to reposition itself amid an industry-wide transformation toward smaller, faster, and more energy-efficient chips.

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Intel’s prior investment promises—including the much-touted \$15 billion expansion backed by a \$3.2 billion government grant—now hang in the balance. If Fab38 doesn’t come online with state-of-the-art production capabilities, the entire value of the Kiryat Gat operation could be in question. This also poses a significant reputational risk to the Israeli government, which has marketed its high-tech ecosystem as indispensable to global players.

Moreover, Israel’s broader tech economy, often seen as a bastion of innovation, may suffer a confidence hit. With international giants pulling back and startups like Granulate being acquired and dissolved, the ripple effects could deter future foreign direct investment. Intel’s strategic shifts might also foreshadow similar moves from other chipmakers in the region, intensifying uncertainty across the sector.

There’s also a labor narrative here that shouldn’t be overlooked. Thousands of high-skilled workers—engineers, technicians, and operational staff—are being displaced in an already competitive job market. Israel’s domestic tech ecosystem may absorb some, but many will struggle, especially those tied closely to outdated chip manufacturing processes.

Intel’s silence on the future of Fab38 is particularly telling. If the company decides to pause or scale down construction, it would be a major vote of no confidence not only in Israel’s manufacturing capabilities but also in the global relevance of the country’s semiconductor footprint.

In sum, what’s happening at Kiryat Gat is a microcosm of a much larger drama: the race for semiconductor supremacy, where nations and corporations alike are deciding—often brutally—what’s worth saving and what’s obsolete.

🔍 Fact Checker Results:

✅ Confirmed: Intel Israel is laying off hundreds of employees, including at Kiryat Gat.
✅ Verified: The plant produces outdated 7nm and 10nm chips.
❌ Unconfirmed: The fate of Fab38 is not yet publicly decided.

📊 Prediction:

Given the current trajectory and lack of clear investment signals from Intel, it’s highly probable that Fab38 will face either significant delays or a shift in purpose. Unless the Israeli government provides additional incentives or Intel revises its global roadmap to include legacy fab modernization, Kiryat Gat could face partial decommissioning by 2026. Expect further consolidation and offshoring of manufacturing to regions with stronger AI-era infrastructure and lower labor costs.