Intel Corp. has reportedly paused construction work at its new $25 billion semiconductor manufacturing plant in Kiryat Gat in Israel, according to local media reports.

Calcalist and several other news sites reported today that Intel has told a local infrastructure construction firm to halt work on the project indefinitely. In a statement to Reuters, Intel tacitly admitted the delay, but insisted it remains committed to Israel, where it employs almost 12,000 workers and owns several research facilities.

“Managing large-scale projects, especially in our industry, often involves adapting to changing timelines,” the company said. “Our decisions are based on business conditions, market dynamics and responsible capital management.”

Intel gave no clue as to how long it intends to keep construction on hold, but the mention of “capital management” indicates that it may be stalling while it determines the best way to fund the project going forward. Intel has ambitious plans to build out its chipmaking infrastructure globally, and those plans call for billions of dollars in investment.

The company can’t pay for everything by itself, and has instead gotten creative, working with private equity firms such as Apollo Global Management LLC and Brookfield Asset Management LLC to help fund some of its projects. It’s also relying heavily on government grants for a number of its projects.

Besides funding headaches, Intel may also have concerns regarding the ongoing conflict between Israel and Hamas, though this wasn’t mentioned in its statement.

The construction delay comes almost a year after Intel first confirmed its plans to expand its chip fabrication capacity in Israel. In June 2023 it revealed it would invest $25 billion on building a new chip wafer fab in Kiryat Gat. In December, it announced it had received a grant of $3.2 billion from the Israeli government to help with construction costs.

The Israel site is one of a number of new chip fabs Intel currently has under construction, with others located in the U.S., Germany and Ireland. The manufacturing capacity expansion is part of Intel Chief Executive Pat Gelsinger’s grand plan to return Intel to its status as one of the world’s most preeminent chipmakers. To date, it has committed to spending more than $100 billion to try to take on the world’s leading chip manufacturer, Taiwan Semiconductor Manufacturing Co.

Intel’s decision to pause work on the Kiryat Gat facility comes around 18 months after it canceled plans to build a high-end research and development complex in the Israeli city of Haifa.

Photo: Thomas Cloer/Flickr