Israel is lobbying Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung Electronics and Intel to set up advanced semiconductor manufacturing in the country, while also planning a data center cluster built around 100,000 graphics processing units, according to remarks from the head of Israel’s National AI Directorate cited by Bloomberg.
The official said Israel wants the companies to build a semiconductor production cluster capable of making the most advanced chips at process nodes below 2 nanometers. He said, "If we don’t get an advanced fab from any one of them, I would view it as a major failure." Spokespersons for all three chipmakers had not responded, the report said.
Israel is targeting sub-2nm chip production
The effort centers on TSMC, Samsung Electronics and Intel, with Israel explicitly seeking sub-2nm manufacturing capacity. The comments show the country is trying to anchor leading-edge chip production at home as it positions itself in the global AI race.
The challenge is not new. Intel began construction in Israel in 2023 on a $25 billion fab project and received a $3.2 billion subsidy from the Israeli government. The project was halted the following year after losses expanded and Intel struggled to compete with TSMC and Samsung, underscoring how difficult it has been to push advanced manufacturing investment in the country.
A five-year plan for a 100,000-GPU data center hub
Beyond chipmaking, Israel has laid out a plan to build a data center cluster with 100,000 GPUs within five years. The report said that scale is comparable to the upper limit of a single AI gigafactory under the European Union’s earlier planning.
The EU had initially proposed up to five AI data centers, each with 100,000 GPUs, but that plan has recently been cut back.
Middle East AI infrastructure competition is intensifying
The report placed Israel’s plans in a broader regional contest over sovereign AI infrastructure. In Abu Dhabi, the United Arab Emirates is pushing a campus with hundreds of thousands of GPUs led by OpenAI and local company G42. In Saudi Arabia, AI company Humain partnered last year with private equity giant Blackstone to invest $3 billion in domestic data centers.
Power capacity remains a key constraint
Electricity supply is one of Israel’s main bottlenecks. The local electricity authority said this week it would stop accepting new server farm applications for the rest of this year because cumulative data center power demand had already exceeded the country’s ability to supply electricity.
Israeli officials said the grid would not block the government’s plan, adding that the local power company could support the electricity demand tied to the proposed GPU buildout.
Data centers may be designated critical infrastructure
Israel also plans legislation that would classify data centers as critical infrastructure and ensure air defense systems are deployed to protect the sites. The bill is still awaiting a final vote.