The Intellionaire Ep. 15 - Pax Silica & “Fort Foundry One”

Exploring Intel’s potential core Foundry role in the Middle East

I hope no one minds a slightly early publication of this week’s Intellionaire episode - there might be some big news coming out on Friday, so I wanted to get this episode out in advance, instead of being reactive. I’m taking a bit of a speculative punt on this one, and could absolutely be wrong; however, I wanted to share my thoughts with you all. Buckle up & settle in for this week’s deep dive!

In December last year, the ‘Pax Silica’ was formed; a global coalition, initially consisting of nine nations, with the intent to form a silicon alliance that promotes global resiliency in AI & semiconductor manufacturing.

The Founding nations are: the USA, the United Kingdom, the Netherlands, South Korea, Japan, Israel, UAE, Australia & Singapore. This week, Qatar & India have been added, to expand the coalition to 11 nations. Taiwan is notably absent from the coalition - primarily because the main role of this initiative is to reduce reliance on this single geographically and geopolitically high-risk location, as well as the sensitive diplomatic relations and implications this would have with China.

So, what is Intel’s role in Pax Silica? Well, obviously Intel will play a crucial role in the USA in terms of its advanced R&D in Oregon & Santa Clara, as well as its manufacturing and advanced packaging in Arizona and New Mexico.

However, in this episode, I want to explore how Intel fits into this alliance outside of the USA - in particular, its advanced manufacturing role in the Middle East - specifically its Israeli Fabs.

Now, there was a brief and mysterious press release earlier this week that this coming Friday (16th Jan), there will be an announcement on a joint project between the US and Israel called “Fort Foundry One”.

All that is known so far is this will be an industrial park based in Israel, and it will be a joint US/Israeli project. The name “Foundry” does obviously imply that it will involve semiconductor manufacturing.

The two main semiconductor foundries in Israel are Intel and Tower Semiconductor. Intel is the provider of advanced silicon, with Tower providing the legacy nodes. Intel and Tower have worked together closely over recent years; in fact, Intel at one point were close to buying Tower Semi for around $6Bn before this deal was eventually blocked by Chinese regulatory authorities in 2023. Regardless, they have continued close co-operation and are even producing a joint 65nm process in New Mexico together using Intel’s fabs there.

Now, until Friday comes around when we should get official details, unfortunately I have not been able to find any additional concrete information on what “Fort Foundry One” might be. However, there is plenty of indications out there to suggest that this may well be a joint US/Israeli expansion of the existing Intel site at Kiryat Gat, where currently Fab 28 is operational and Fab 38 is under construction.

For background, Intel has been operating in Israel since the 1990’s when they opened Fab 18. This site has since been replaced by Fab 28, which is located on the Intel campus in the Kiryat Gat industrial park. This Fab went operational in 2008, and it is the main global production site for the Intel 7 node, which is currently capacity constrained - so this Fab is literally carrying Intel Foundry & Products right now, whilst Intel 3 in Ireland and Intel 18A in Arizona continue to ramp into mature volume status. There was some emergency Intel 7 capacity opened in Arizona, but Israel’s Fab 28 remains the primary manufacturing location.

Around 2022, construction started on Israel’s first advanced EUV fab - Fab 38 - right next to the existing Fab 28 in the Kiryat Gat industrial park. This was originally scheduled to be a DUV-based plant in 2019 when it was first conceived, however Pat Gelsinger converted it to be the premier 18A production Fab outside of the USA. Now, Fab 28 has 200,000 sqft of cleanroom space, with Fab 38 adding an additional 600,000 sqft of cleanroom space once completed.

I have highlighted below on the map Fabs 28 & 38, as well as the broader Kiryat Gat industrial park:

You can see Intel Fab 28 (200,000 sqft cleanroom) highlighted in blue. Fab 38 - (currently an empty 600,000 sqft cleanroom shell) - is highlighted in red. The broader Kiryat Gat industrial park is highlighted in green, adjacent to the 60,000 population City of Kiryat Gat.

In terms of wafer production capacity at the Israel site, we can visualise it on this helpful chart which was shared by Intel at their 2025 Foundry Direct Connect Event:

You can see that Isreal Fab 28 (Non-EUV capacity bar) has the highest volume of older DUV capacity out of any Intel Fabs globally. The ‘EUV’ bar to the left shows that once Fab 38 is completed, it will be roughly 2/3rds the output of Arizona Fab. As we know, Naga recently claimed that Fab 52 would be eventually capable of 10,000 wafer starts per week, or 20,000 wafer starts per week for Fab 52 & 62 combined. Using this as a baseline reference, Fab 38 in Isreal should be capable of around 15,000 wafer starts per week when completed. At $25,000 per 18A wafer, this equates to a potential maximum annual revenue from this site of around $19Bn.

The issue right now is that construction of Fab 38 is currently paused for cost-saving measures, and it is unlikely to resume until external customers for 18A/18AP are signed on. However, Isreal’s inclusion in Pax Silica and the upcoming announcement of “Fort Foundry One” later this week suggest that there may be hope for Fab 38 to resume construction in order to play a central role in providing advanced silicon to the Middle East at large - including UAE, Qatar & potentially Saudi Arabia. As I said in a previous episode, I believe Intel’s current discussions and deals with Saudi Arabia are regarding using Intel Products for government projects (Hexagon, Smart Cities, etc), not so much building new fabs in Saudi.

So, let’s all look to Friday 16th when we should potentially get more details on the “Fort Foundry One” joint US/Israeli industrial park. I may be completely wrong, but if I were to hazard a guess, it will be commitment to finishing Fab 38 & expanding the Kiryat Gat Industrial Park further with advanced fabs & packaging facilities. My second guess would be a brand new industrial park with Tower Semiconductor, but this would make less sense for the US to be involved as Tower is an Israeli company, unlike Intel which is American. I’m going to put out the next Intellionaire episode out after earnings next week (22nd), so I will see you all in the next one!

For my paying subscribers, again thank you very much for your investment in this newsletter. Below I outline further details and specifics on why I think Kiryat Gat will be the focus of Fort Foundry One, and I perform a more detailed analysis of the existing Fab 28/38 complex, and where it can expand to accommodate up to four future fabs based on planning documents. I also map out where a brand new US Military base has been set up right next to the Fab, which may be the basis of the name “Fort Foundry One”. Enjoy!