Israel’s deal with Intel is a big show of support by a major US company and a generous offer by the Israeli government at a time when Washington – which is Israel’s biggest supporter – has increased pressure on Tel Aviv to take further steps to minimise civilian casualties in Gaza.

In addition to the grant that amounts to 12.8 percent of the total investment, the chipmaker also committed to buying 60 billion shekels ($16.6bn) worth of goods and services from Israeli suppliers over the next decade, while the new facility is expected to create several thousand jobs.

In June, Israeli Prime Minister Benjamin Netanyahu publicised news of the deal – which remained unconfirmed by Intel until now – heralding the decision to build a new chip plant as “unprecedented”, adding that “this is the largest investment ever in the State of Israel”.

Intel operates four development and production sites in Israel, including a manufacturing plant in Kiryat Gat, 42km (26 miles) from the Gaza Strip.

An expansion plan for the Kiryat Gat site is an “important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States”, Intel said in a statement.

The plant produces Intel 7 technology, or 10-nanometer chips, and employs nearly 12,000 people in the country while indirectly employing another 42,000 more.