Intel reportedly suspended plans to establish a $25 billion chipmaking facility in Israel, a decision the company claimed was due to changing project timelines and market dynamics.

According to local outlet Calcalistech, Intel’s suppliers in the country have received notice of cancellation of contracts for the provision of equipment needed to build the new factory, a plan agreed by the chipmaker and the Israeli government in December 2023.

Under the deal, the government was to provide Intel with a $3.2 billion grant for the establishment of the facility, however the publication noted the company’s Israeli operation has recently moved to relocate some of its senior executives to a new site it is building in Ohio, US.

Intel and the Israeli government previously earmarked 2028 for the factory’s launch.

Israeli officials are reportedly aware of the company’s decision, and in a statement seen by Calcalistech, Intel explained “managing a project of this magnitude, especially in our industry, usually involves schedule adjustments”, adding “our decisions are based on business conditions, market dynamics, and responsible capital management”.

Intel apparently added it remains committed to the market, which it brands as one of its key manufacturing and R&D sites.

In 2023, Intel pumped a $300 million investment into Israel-based Tower Semiconductor, after a proposed merger between the pair fell through.