JERUSALEM (Reuters) -U.S. chipmaker Intel Corp will spend $25 billion on a new factory in Israel, Prime Minister Benjamin Netanyahu said on Sunday, calling it the largest-ever international investment in the country.

The factory in Kiryat Gat is due to open in 2027, to operate through 2035 at least and to employ thousands of people, Israel's Finance Ministry said. Under the deal Intel will pay a 7.5% tax rate, up from the current 5%, the ministry added.

During its almost five decades of operations in Israel, Intel has grown to become the country's largest privately held employer and exporter and a leader of the local electronics and information industry, according to the company's website.

In 2017, Intel bought Israel-based Mobileye Global Inc, which develops and deploys advanced driver-assistance systems, for $15 billion. Intel took Mobileye public last year.

Announcing the deal in televised remarks to his cabinet, Netanyahu called it "a tremendous achievement for the Israeli economy - 90 billion shekels ($25 billion) - the largest investment ever by an international company in Israel".

In a statement, Intel said its Israel operations had "played a crucial role" in the company's global success.

"Our intention to expand manufacturing capacity in Israel is driven by our commitment to meeting future manufacturing needs ... and we appreciate the continued support of the Israeli government," it said.

(Writing by Dan Williams and Ari Rabinovitch; editing by James Mackenzie)