There is no reason why this could not be done in US, Canada or Ireland or anywhere else. Israel is chosen this time for the same reason it was chosen intially for setting up a foundry.
Massive investment by a US company in sensitive areas (in this case leading-edge semiconductor technology) ties US interests with that of Israel. Many Jewish-Americans share this belief, and have played a role in making Intel invest in Israel. Some of the biggest Intel shareholders are Jewish. Jewish-Americans in general are very active in lobbying and aligning US interests with that of Israel, whether it be by means of media or commerce.
This proven record only came once Intel invested there. Before that, Israeli "success" were limited in the narrow vertical of military opto-electronics. In this segment, their task of duplicating US products was made easier since they have access to all the same manufacturing equipment as companies in US (unlike rival defense companies in Russia or China). They were also helped by the fact that Israel gets a huge military aid, which in effect subsidized their entire industry.
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Do you have any sources on the approx amount of jewish shareholding in Intel?
How does US military aid subsidize their semiconductor industry? I thought US just gives away finished military hardware to certain countries like Israel so I don't get your point.
I also think the migration of skilled Jews from the former Soviet union also helped propel Israel's high tech sector.