US chipmaker Intel has launched a large-scale downsizing campaign in "Israel" on Monday, cutting jobs and reducing operations at its flagship manufacturing site in the southern settlement of Kiryat Gat. The move signals deeper structural challenges for the company, both locally and globally.

According to "Israel’s" Globes business daily, Intel has trimmed its workforce at the Kiryat Gat plant from around 5,000 employees in 2019 to just 4,000 by the end of 2023. The company’s ongoing global restructuring follows a sharp revenue decline, from $78 billion in 2020 to $53 billion in 2023, and a net loss of $18.7 billion over that period.

As part of its cost-cutting strategy, Intel has introduced extensive automation at its Fab 28 plant, leading to the dismissal of about 200 manufacturing workers and roughly 10% of its research and development team. Once a model of performance since opening in 1996, Fab 28 has contributed an estimated $86 billion in exports, representing 3–3.5% of "Israel’s" annual exports.

The layoffs reflect broader restructuring within Intel, which is under rising pressure from Taiwan’s TSMC, the dominant supplier for major clients such as Apple, Nvidia, and Amazon.

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Despite halting the construction of Fab 38, Intel’s next-generation facility, the company has not faced any punitive action from "Israel’s" Finance Ministry or Investment Authority. It has received roughly $1.5 billion in state support over the years, and in late 2023, it was approved for an additional $3.2 billion in funding. That grant remains intact, as funding benchmarks have not yet been violated.

Nvidia expands as Intel contracts

While Intel scales back, its  US-based rival Nvidia is rapidly expanding in "Israel". The company recently announced a $540 million plan to build a major AI development hub in the north, aiming to hire 5,000 employees.

The move is seen as part of a broader shift in "Israel’s" tech sector from traditional chip manufacturing to artificial intelligence and advanced R&D.

In Kiryat Gat, where Intel is a major economic anchor, concerns are mounting. With the future of Fab 38 uncertain and layoffs intensifying, the settlement's economy faces potential long-term disruption.

Read next: Intel to invest record $25bn in chip factory in 'Israel'

While Intel continues to offer generous severance packages, sometimes exceeding $238,000, many workers, especially older staff, are worried about finding new employment in an increasingly competitive and shrinking job market.