Why Is Intel Investing Billions in Israel?




    Esher – Top banner

    Why Is Intel Investing Billions in Israel?

    In the last week of January, the world was stunned by the announcement of an amazing new development in the Israeli economy, namely that the international microchip giant Intel had decided to invest an unprecedented 40 billion NIS to build a new production facility in the southern city of Kiryat Gat. By Shneur Levin for the Beis Moshiach Magazine • Full Article

    Beis Moshiach Magazine/By Shneur Levin

    In the last week of January, the world was stunned by the announcement of an amazing new development in the Israeli economy, namely that the international microchip giant Intel had decided to invest an unprecedented 40 billion NIS to build a new production facility in the southern city of Kiryat Gat.  This was a far from ordinary economic decision, and will in fact be the largest investment in the Israeli economy in history to date.

    The announcement made waves and was reported by the leading economic media platforms around the world.  For example, the Reuters News Agency reported, “U.S. chip-maker Intel plans to spend 40 billion shekels ($10.89 billion) to build a new manufacturing plant in Israel.”

    In fact, negotiations between Intel and the finance ministry regarding the investment have been ongoing for a few months.  Part of the discussion dealt with the size of the investment on the part of Intel towards the building of the plant, and the percentage of the cost covered by a grant the company would receive from the state coffers.

    A few words about the company: Intel is an American multinational corporation, and one of the world leaders in the field of design and production of microprocessors and integrated circuits also known as microchips.  It also produces network cards, microchip systems for motherboards, software products and other devices.

    As of 2016, Intel employed over one hundred thousand people around the world.  Its current net worth is valuated at $241 billion, and its total revenue for fiscal year 2018 was reported as $70.848 billion, with a net income of $21.053 billion.

    This is not the first major announcement from Intel regarding investment in Eretz Yisrael.  Back in May, the semiconductor giant announced a $5 billion investment to expand the existing Kiryat Gat facility, and also committed to procurement of local businesses of over $850 million and the hiring of an additional 250 workers from nearby cities.  The CEO of Intel Israel, Yaniv Garty, then informed the Economy Minister about the decision on the part of Intel to accept the terms of the draft agreement worked out with the finance ministry and economy ministry, and to expand the Kiryat Gat facility to the tune of $5 billion.

    The minister responded with a statement, “The decision by Intel to continue to invest significantly in Eretz Yisrael is an important vote of confidence in Eretz Yisrael and the Israeli economy.  Its activities in Eretz Yisrael in the field of innovative manufacture is fully supported by the policies of the Economy Ministry, aimed at increasing exports, creating quality jobs in general, and in that region in particular.”

    In light of that, the new announcement made by the company in conjunction with the statement of the Finance Minister, made waves and has great import as far as the strength and soundness of the economy in Eretz Yisrael.

    This achievement can actually be traced back to following the guidance of the Rebbe, who decades ago encouraged leading economists to encourage investment in Eretz Yisrael on the part of large foreign corporations, in order to bring in an infusion of cash and to create employment opportunities for its Jewish citizens.


    A fascinating glimpse into the assistance provided by the Rebbe towards the development of the Israeli economy, can be found in an interview with Professor Moshe Mandelbaum, former Governor of the Bank of Israel.  Mandelbaum was considered an economic superstar, who stepped up on two occasions to save the Israeli economy.  He also set into place policies that bring billions into the economy and the state coffers, to this very day. Professor Mandelbaum gave the interview to JEM, as part of their Encounters with the Rebbe project.

    Professor Mandelbaum begins his account, “In the young Israel of those years, nobody dealt with economics.  The big questions of actualization and the issue of security were on the table.  The one who laid the foundations for the study of economics in Eretz Yisrael, was the American-Jewish economist Don Patinkin (then a professor in Hebrew University, who later served as the president of the university).

    “We were a group of ten individuals, who were invited to the home of Patinkin after one of the tests. We went in filled with concerns, as we had no idea what he wanted.  We thought that the test must have gone badly.  But no, he poured us glasses of tea and explained that our test scores were excellent and what he wanted to ask of us was that we not abandon the field, and continue in order to help save the Israeli economy.  That is how we became the group known as na’arei Patinkin (Patinkin’s boys – members of this group all ended up playing leading roles in the developing economy of the early years of the state).”


    However, for his first step out into the big world, Mandelbaum gives credit to a statement of the Sages that he learned in yeshiva, “Train your tongue to say, ‘I do not know.’” This took place after he had completed his studies, got married and already had one child.  The ability to continue to advance in his studies was aborted due to financial constraints.  What happened next was, “One bright morning, I read in the newspaper that the American State Department was launching a worldwide project to choose a representative from every country around the world to come to America to study economics, and to return to their home country with expertise in the field. This was my opportunity.”

    The only problem was that this initiative drew another two hundred applicants from the fledgling country of Israel.  After two weeks of interviews and evaluations, the American committee chose Moshe Mandelbaum.

    “At a later point, I met one of the examiners and asked him why they chose me?  He gave me an interesting answer: All of the candidates tried to convince us to choose them because they are knowledgeable and talented.  You were the only one who argued that he does not know enough and still wants to learn.  That was the reason that I chose you.”

    Weighted with the responsibility for a child and a family, Mandelbaum set out to continue his studies at Vanderbilt University in Nashville, Tennessee.  Here he encountered an elite group of economists, all of whom rose to fame in later years.  “There were among our number a few Nobel prize winners, one of whom was the one who stabilized the economy of Bangladesh. Also, the later governor of the Bank of Turkey and the governor of the Bank of South Korea studied with me.  Practically speaking, aside from the studies on the highest level, I acquired a tremendous international network of contacts.”

    At this point, Mandelbaum goes on to speak about his encounter with the Rebbe.  Mandelbaum chuckles, “This is a story that was never published.  I reckon that all of those that are witnessing the tremendous growth of foreign investment in Eretz Yisrael, would never consider that in essence it is all thanks to the vision of an Orthodox Rabbi from New York.”


    Mandelbaum had already completed his studies, returned home to Eretz Yisrael and was appointed to the post of director in the Ministry of Industry, when he traveled to the United States for a few days to formally present his doctoral dissertation, leaving behind a wife and two children.  It was in the days following the Six Day War.  Admiration for the citizens of the tiny country of Israel was at an all-time high.  The yarmulka that Mandelbaum wore was not only not a hindrance, on the contrary, “Six hundred leading professors from all of the universities in Tennessee signed on a declaration in support of Eretz Yisrael.  However, there was one exception. Painfully, it was a Jew who suffered from auto-antisemitism.  He hated the Jewish people more than anybody.

    “To my great dismay, I was informed that specifically this professor was on the doctoral review committee that would be reviewing my doctorate. Over the next few days, I discovered that his hatred for the Jewish people might well sabotage me.  He began to push off my presentation with various arguments, excuses and justifications.  I understood that I had to delay my return flight.  The danger to the completion of my work was palpable.  The fate of the five-year investment in my studies hung in the balance.”

    The one who saved him in his time of despair, was a Lubavitcher Chassid by the name of Rabbi Zalman Posner.  “He would circulate on the university campus and offer assistance to the Jewish students, mainly drawing them close to Judaism.  He is the one who introduced me to the persona of the Lubavitcher Rebbe; and most importantly, he used his connection for me to be accepted for an emotionally charged yechidus that I will never forget for all of my days.”

    During the late-night hours of one night that week, the young economist found himself inside the famous building known as “770” in Crown Heights, Brooklyn.  “I have met not a few people in my life, leaders, economists and high-ranking people in just about every field,” he says from the perspective of his over eight decades, but he was something entirely different.  I can’t forget his wise gaze, and especially his targeted questions.


    “After I told him the story, I was surprised to hear the Rebbe asking me to lay out for him the central thesis of my doctoral dissertation.  I began to detail it for him, and he listened very intently.  I told him that I was discussing the policy of capital investment of Eretz Yisrael, and about the plans that I was proposing to stimulate foreign companies from around the world to invest in Eretz Yisrael.

    “To my astonishment, he stopped me and said, ‘You are making a big mistake.  Your proposition is not relevant.’ He immediately explained, ‘The economic policy-makers in Eretz Yisrael do not fully understand the needs of the large companies around the world.  You are offering them large capital loans at low interest rates, but these companies really don’t need that.  We are talking about huge conglomerates that can get those loans even in their countries of origin, and there is no reason for them to invest in Eretz Yisrael.  You have to provide added value,’ the Rebbe said. ‘I suggest that you give them large grants.  That is something that they do not receive in any other place. That is the way that they will come to Eretz Yisrael.’

    “I remember that moment.  It was like a bolt of lightning that pierced my brain.  The Rebbe did not want any credit or anything. He just wanted to help me fix up my dissertation and mainly to help Eretz Yisrael. “Correct that point in your work,’ he said, practically imploring.  When I told him about the professor on the committee who was holding me back from moving on to the next stage, he dismissed it and gave me a bracha.  I don’t recall the exact content of what was said, but when the Rebbe spoke I was overtaken by trembling.  I felt then the confidence that I would succeed in overcoming this obstacle.

    “Right before I made my exit, he turned to me and said something along the lines of, ‘You have to do everything from above.’ Since we were speaking in English, I am not certain, but I surmise that what he said to me then was a translation of the famous Chabad aphorism ‘l’chatchila ariber.’  He indicated to me that I had to circumvent the impediment from above. ‘There are higher ways,’ he said, and we parted ways.”


    Initially, Mandlebaum understood that the Rebbe meant that he offer up prayers “above,” toward the heavens.  However, he then called his brother in Eretz Yisrael who understood the allusion to mean, “You need to circumvent this professor.  Approach the head of the economics department and tell him the whole story.” That is how the brother explained the words of the Rebbe.

    “To anyone who is familiar with the world of the academy, this was clearly a dangerous tactic.  For a student to lodge a complaint against the person appointed over him is a move that could likely incite the entire leadership against him.  It is something that would most probably end badly, but I was confident in the blessing of the Lubavitcher Rebbe. I went to the head of the department and told him everything that I had gone through.  The result was shocking.  The department head said to me: Wait a second.  I heard him go into the next room, call the head of the committee staff and tell him, ‘Tomorrow at 10 a.m. you are all coming to my room, and Mandelbaum will give a talk to defend his thesis.  If (here he cited the name of the opposing professor) does not want to, I am removing him from the committee.’

    “The presentation of my thesis took place the next day.  That professor did not attend and he was in fact let go.  My success was above and beyond, to the point that it was publicized in all of the local media, but I knew who gets the credit for where I found myself.  It was the Rebbe who directed me as to how to proceed.”

    The final chapter of this story is somewhat sad.  “Four months after I had already returned to Eretz Yisrael and began to be active in the Ministry of Commerce, I read in the newspaper that a group of terrorists had taken control of a Pan American airliner in Karachi, Pakistan, and about the three Americans who sustained severe injuries in the course of this episode.  When I read their names, I nearly fell over.  One of them was this anti-Israel professor, who had become in time the economic adviser of Pakistan.  It was quite off-putting that specifically he of all people was injured by Palestinian terrorists.

    “A number of years ago, I was invited to speak in the United States at an event attended by all of the members of my graduating class. I saw that professor seated at the end of the table in a wheelchair, being cared for by a foreign health care aide who had to carry him around half paralyzed.  I approached him, but he claimed that he did not remember me. I remembered him quite well.”


    The first thing that Professor Mandelbaum did upon his return to Eretz Yisrael with his doctorate, was to lead the charge for the amendment to the law suggested to him by the Rebbe to encourage capital investment.  In his words, “Whoever is not savvy in economics, could not understand this.”

    The real miracle story here, though, is the Israeli economy.  “I remember how during my years as a student in the United States, every economist I met all had the same one question. ‘How will you survive from an economic standpoint?’

    “I recall,” he says with some nostalgia, “that on one of the early days of the establishment of the state, I was called to the office of the first Prime Minister, David Ben-Gurion.  He wanted to attach me to a committee called ‘towards the second million.’  During that stage, the state was preparing for a new wave of immigration, which would require preparation to avoid the growing pains experienced by the first million citizens.  Ben Gurion asked me, ‘What is your opinion? Will we succeed in surviving the second million?’  I answered him, ‘If you will be in charge, we will even reach the third million.’

    “This really was not simple.  All of the conditions were aligned against us.  Today, wherever I go, people ask me the opposite question, ‘How did you succeed in transforming into such an economic powerhouse?’  I always raise my finger and point up to heaven.  There are not very many possible explanations for this phenomenon.  Personally, I know that at least as far as foreign capital investment, the golden advice that I received from the Lubavitcher Rebbe during that encounter, had a tremendous impact.  The grants that were given to corporate giants like IBM, Intel and Microsoft, brought in the largest corporate economic powerhouses in the world.

    Practically speaking, Mandelbaum’s personal story is the story of the Israeli economy.  He was there from the days of the legendary Finance Minister, Pinchas Sapir, through all of the ups and down, until those hard to forget terrible years of out of control inflation in the early eighties.  That was the period when the Israeli shekel crashed and brought us the New Israeli Shekel (NIS).

    Mandelbaum stepped into the role of Governor of the Bank of Israel, at a time when the entire Israeli economy was crying out for help.  “I came in then with a stabilization plan.  This was a very harsh plan.  We cut sixty million dollars out of the budget, and following that I raised interest rates up to the sky.  For four months straight, the interest rate in Eretz Yisrael stood at a whopping eighty percent!  What happened was that all of the stores in Eretz Yisrael were driven to sell merchandise and bring in cash.  Within four months, the depression came to an end, and I had the privilege to be the shliach,” he concludes with obvious satisfaction.

    “Recently, I read in the papers about the addition of another branch of Intel in Eretz Yisrael, about hundreds of more jobs, and about more powerful growth that it is expected to bring to the economy.  It makes me smile to myself because of the knowledge that it is all thanks to the work we did back then, acting under the Rebbe’s guidance.”

    To subscribe for the new revamped English ‘Beis Moshiach’ weekly magazine, please email [email protected].


    Never Miss An Update

    Join ChabadInfo's News Roundup and alerts for the HOTTEST Chabad news and updates!

    Tags: ,

    Add Comment

    *Only proper comments will be allowed

    Related Posts:

    Why Is Intel Investing Billions in Israel?