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State of <strong>Israel</strong><br />
M<strong>in</strong>istry of Industry, Trade & Labor<br />
<strong>Invest</strong>ment Promotion Center<br />
<strong>Invest</strong> In <strong>Israel</strong><br />
Where Breakthroughs Happen<br />
Creat<strong>in</strong>g Synergies <strong>in</strong> ICT
Country ID<br />
Area: 22,000 sqkm<br />
Population: ~ 7.4 millions<br />
GDP: $201 Billion (2010)<br />
Ma<strong>in</strong> Cities: Jerusalem, Tel-Aviv, Haifa, Be’er Sheva<br />
Maps: Wikipedia
Ma<strong>in</strong> Economic Indicators<br />
Criteria<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
GDP (current prices <strong>in</strong> $B)*<br />
144.0<br />
164.1<br />
191.8<br />
193.1<br />
202.0<br />
GDP Real Growth Rate (%)<br />
5.2%<br />
5.4%<br />
4.0%<br />
0.7%<br />
4.6%<br />
GDP per Capita<br />
(PPP adjusted)**<br />
$24,271<br />
$27,395<br />
$28,473<br />
$28,160<br />
$28,920<br />
GDP per Capita Growth Rate<br />
(%, Current prices)<br />
3.3%<br />
3.5%<br />
2.1%<br />
-1.1%<br />
2.7%<br />
Exports (Goods & Services)** $B*<br />
(As Percentage of GDP)<br />
62.6<br />
(43.5%)<br />
71.2<br />
(43.4%)<br />
80.4<br />
(40.3%)<br />
70.35<br />
(36%)<br />
81.8<br />
(40%)<br />
Imports (Goods & Services)** $B*<br />
(As Percentage of GDP)<br />
62.2<br />
(43.2%)<br />
74.0<br />
(45.1%)<br />
84.1<br />
(42.2%)<br />
72.3<br />
(37.4%)<br />
81.2<br />
(40%)<br />
Unemployment Rate (%)<br />
8.4%<br />
7.3%<br />
6.1%<br />
7.5%<br />
6.6%<br />
•*Us<strong>in</strong>g public exchange rate.<br />
** In current prices<br />
Source: Central Bureau of Statistics
<strong>Israel</strong> - Inward & Outward Foreign Direct <strong>Invest</strong>ment<br />
(Millions of US$)<br />
30,000<br />
Inward FDI Outward FDI Total Inward <strong>in</strong>vestments<br />
25,000<br />
20,000<br />
15,000<br />
10,000<br />
5,000<br />
0<br />
Source: Bank of <strong>Israel</strong>
Million US$<br />
V. Capital Raised by <strong>Israel</strong>i Hi-Tech Companies<br />
2500<br />
Foreign<br />
2000<br />
<strong>Israel</strong>i<br />
1500<br />
1000<br />
500<br />
0<br />
02' 03' 04' 05` 06' 07' 08' 09' 10'<br />
Source: IVC-ONLINE
<strong>Israel</strong>’s Electronics & Information Industries<br />
Source: <strong>Israel</strong> Association of Electronics and Software Industries - 2009
<strong>Israel</strong>’s Communications Cluster - Highlights<br />
• 1 st <strong>in</strong> the world <strong>in</strong> expenditure on R&D <strong>as</strong> a percentage<br />
of GDP.<br />
• 2 nd <strong>in</strong> the world for Entrepreneurship of managers.<br />
• Thriv<strong>in</strong>g VC Industry – 3 rd <strong>in</strong> the World.<br />
• 4 th <strong>in</strong> Attitudes toward globalization.<br />
• Strong government support for R&D.<br />
• Strong cooperation between Industry & Academia.<br />
• Defense Industry - catalyst for new ICT technologies.<br />
• Entrepreneurial culture - 1,000 start-ups <strong>in</strong><br />
Communications.<br />
Source: IMD World Competitiveness Yearbook - 2010
<strong>Israel</strong>’s Communication Cluster<br />
Se<strong>as</strong>oned VC<br />
Community<br />
Lead<strong>in</strong>g<br />
Academic<br />
Institutions<br />
& Research<br />
University<br />
Students and<br />
Postgraduates<br />
Defense<br />
Technology<br />
Spillover<br />
Experienced<br />
2 nd Time<br />
Entrepreneurs<br />
Availability<br />
of<br />
Human<br />
Capital<br />
Successful<br />
Communications<br />
Companies<br />
Exist<strong>in</strong>g<br />
Technology<br />
Infr<strong>as</strong>tructure<br />
Corporate<br />
Sp<strong>in</strong>-offs<br />
Veterans of<br />
Global<br />
Communication<br />
Firms<br />
Corporate R&D<br />
Innovative &<br />
Entrepreneurial<br />
Culture<br />
Strong<br />
Government<br />
Support<br />
Technological<br />
Incubators
Advanced Communication Infr<strong>as</strong>tructure<br />
• 85% of Internet connections are broadband.<br />
• 89% Internet penetration to households.<br />
• 92% Penetration of digital Multi-channel TV.<br />
• 95% Penetration of Cable TV to households.<br />
• 95% Penetration (of households) of telephone l<strong>in</strong>es.<br />
•<br />
• 100% Home-P<strong>as</strong>s rate with 3 networks: Twisted - Pair<br />
(PPT), HFC (Cables) and 4 Wireless cellular providers.<br />
• 104% penetration rate of Mobile phones (7.5 million).<br />
• 6 th <strong>in</strong> the World <strong>in</strong> Mobile Telephone subscribers (Per Capita).<br />
Source: M<strong>in</strong>istry of Communication, 2008 & WEF 2008-2009
<strong>Israel</strong>’s Competitive Edge – IMD World Report 2011<br />
Country Rank <br />
1st<br />
2nd<br />
3rd<br />
4th<br />
BUSINESS EXPENDITURE ON R&D<br />
( % GDP)<br />
<strong>Israel</strong><br />
Sweden<br />
Japan<br />
F<strong>in</strong>land<br />
TOTAL EXPENDITURE ON R&D<br />
( % GDP)<br />
<strong>Israel</strong><br />
Sweden<br />
F<strong>in</strong>land<br />
Japan<br />
SKILLED LABOR<br />
<strong>Israel</strong><br />
Denmark<br />
Iceland<br />
Ireland<br />
ENTREPRENEURSHIP OF MANAGERS<br />
Malaysia<br />
<strong>Israel</strong><br />
Taiwan<br />
Hong Kong<br />
FLEXIBILITY AND ADAPTABILITY OF<br />
PEOPLE<br />
Iceland<br />
<strong>Israel</strong><br />
Hong Kong<br />
Brazil<br />
VENTURE CAPITAL AVAILABILITY Hong Kong Malaysia <strong>Israel</strong><br />
Taiwan<br />
<strong>Israel</strong> Ranks 17<br />
Source: IMD World Competitiveness Yearbook - 2011
Significant Selected Mergers & Acquisitions<br />
Acquirer<br />
Amount<br />
Sector<br />
Company<br />
Date<br />
HP<br />
4500 Mil<br />
ICT<br />
Mercury<br />
Jul 2006<br />
B. Hathaway<br />
4000 Mil<br />
Metal Cutt<strong>in</strong>g<br />
Iscar<br />
May 2006<br />
Sandisk Corp<br />
1550 Mil<br />
ICT<br />
M-System<br />
Jul 2006<br />
CSR Plc<br />
679 Mil<br />
Semiconductors<br />
Zoran<br />
Feb 2011<br />
DG F<strong>as</strong>tChannel<br />
517 Mil<br />
ICT<br />
MediaM<strong>in</strong>d Technologies<br />
Jun 2011<br />
Sun Pharma<br />
454 Mil<br />
Pharma<br />
Taro<br />
May 2007<br />
J&J<br />
438 Mil<br />
Life Sciences<br />
Omrix<br />
Nov 2008<br />
Siemens<br />
418 Mil<br />
Clean Energy<br />
Solel<br />
Oct 2009<br />
S1 Corp<br />
325 Mil<br />
F<strong>in</strong>ancial Software<br />
Fundtech<br />
Jun 2011<br />
Medtronic<br />
325 Mil<br />
Medical Device<br />
Ventor<br />
Feb 2009<br />
Broadcom<br />
313 Mil<br />
Semiconductors<br />
Provigent<br />
Mar 2011
Foreign Companies <strong>Invest</strong>ed <strong>in</strong> <strong>Israel</strong><br />
US<br />
• AT&T<br />
• Microsoft<br />
• Epix<br />
• AOL Time Warner<br />
• Intel<br />
• IBM<br />
• Google<br />
• Cisco Systems<br />
• GE<br />
• 3Com<br />
• Hewlett Packard<br />
• Stryker<br />
• Motorola<br />
• Sun Microsystems<br />
• Broadcom<br />
• Dell<br />
• Kodak<br />
Europe<br />
• British Telecom<br />
• SAP<br />
• Philips Medical<br />
• Alcatel-Lucent<br />
• Siemens<br />
• Cable & Wireless<br />
• Deutsche Telekom<br />
• Telecom Italia<br />
• Generali<br />
• Nestle<br />
• L’Oreal<br />
• Danone<br />
• Unilever<br />
• Vilmor<strong>in</strong><br />
• Veolia<br />
• Ferr<strong>in</strong>g<br />
• MERCK Serono<br />
Asia<br />
• Sony<br />
• Toyo Ink<br />
• Fuji<br />
• Honda<br />
• Sumitomo Trad<strong>in</strong>g<br />
• Nomura<br />
• Samsung Electronics<br />
• Daewoo<br />
• LG Group<br />
• Hyundai<br />
• Acer Computers<br />
• Macronix<br />
• W<strong>in</strong>bond<br />
• Hutchison Telecomm<br />
• Scigen<br />
• Ja<strong>in</strong> Irrigation<br />
• Sun Pharmaceutical
Mult<strong>in</strong>ationals <strong>in</strong> <strong>Israel</strong><br />
• Microsoft built its first R&D facility outside the<br />
US <strong>in</strong> <strong>Israel</strong>. It recently established a new<br />
communications R&D center <strong>in</strong> Herzliya.<br />
• Cisco built its first R&D facility outside the US <strong>in</strong><br />
<strong>Israel</strong>.<br />
• Motorola’s <strong>Israel</strong> facility is the company’s<br />
largest development center worldwide.<br />
• IBM established its operations <strong>in</strong> <strong>Israel</strong> <strong>in</strong> 1972<br />
The company employs 2000 people <strong>in</strong> its<br />
facilities throughout <strong>Israel</strong>.<br />
• Intel h<strong>as</strong> 4 R&D facilities and 2 manufactur<strong>in</strong>g<br />
centers <strong>in</strong> <strong>Israel</strong>, employ<strong>in</strong>g 7,000 <strong>Israel</strong>is. Intel<br />
develops & manufactures Centr<strong>in</strong>o, Cure 2 Duo<br />
and most of its mobile WiMAX Chipset <strong>in</strong> <strong>Israel</strong>.
Intel<br />
– Success Story<br />
• Over 7000 employees.<br />
• 4 active R&D Facilities.<br />
• 2 Manufactur<strong>in</strong>g Centers.<br />
• <strong>Israel</strong>i Developments Include:<br />
1st R&D<br />
Center<br />
Outside<br />
USA<br />
opened<br />
<strong>in</strong> Haifa<br />
P. Tikva<br />
R&D<br />
Center<br />
Acquired<br />
DSPC –<br />
$1.6 B<br />
Fab 18 manufactur<strong>in</strong>g<br />
center Opened <strong>in</strong><br />
Kiryat-Gat – $1.6 B<br />
Acquired<br />
Envara –<br />
40 M<br />
Acquired<br />
Mobilian<br />
Acquired<br />
Oplus –<br />
$100 M<br />
1985<br />
1999<br />
2001<br />
2004<br />
2005<br />
2008<br />
1st Manufactur<strong>in</strong>g<br />
center outside USA<br />
opened <strong>in</strong> Jerusalem<br />
Yakum<br />
R&D<br />
Center<br />
Jerusalem<br />
R&D<br />
Center<br />
Yokneam<br />
R&D<br />
Center<br />
Fab28 m. plant<br />
Opened <strong>in</strong> Kiryat<br />
Gat – $3.5 B
Microsoft<br />
– Success Story<br />
• Over 500 employees<br />
• Over $700 million only <strong>in</strong><br />
M&A dur<strong>in</strong>g 2002-2009.<br />
• Herzliya R&D Center is one<br />
out of 3 Strategic Centers.<br />
Focus: Internet, Security<br />
1 st Branch<br />
Outside USA -<br />
3 employees<br />
Panorama<br />
<strong>Invest</strong> <strong>in</strong><br />
Orion Fund<br />
Maximal<br />
Innovative<br />
Intelligence<br />
Pelican<br />
Security<br />
Gteko<br />
Secured<br />
Dimensions<br />
Yadata,<br />
Kidaro<br />
1991<br />
1996<br />
1997<br />
1998<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2008<br />
Haifa R&D<br />
Center<br />
Peach Networks<br />
Whale<br />
Communications<br />
Zoomix<br />
Herzliya<br />
R&D Ctr.
IBM<br />
– Success Story<br />
• Over 2000 employees <strong>in</strong> Haifa,<br />
Rehovot, and Jerusalem<br />
• From 2001-2009:<br />
IBM made 23 acquisitions<br />
Opens<br />
1 st Branch<br />
In 1950<br />
Acquired<br />
Ubique<br />
$15 million<br />
Acquired<br />
Unicorn Solutions<br />
$7.5 million<br />
Acquired<br />
Iphr<strong>as</strong>e<br />
Technology<br />
Acquired<br />
XIV<br />
$300 million<br />
Acquired<br />
FilesX<br />
$80 million<br />
Acquired<br />
Guardium<br />
$225 million<br />
1972<br />
1998<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
Opens Haifa<br />
Development Lab, an<br />
IBM scientific center<br />
Acquired<br />
Watchfire<br />
Converts it to R&D<br />
Software center<br />
Acquired<br />
Diligent<br />
Technologies<br />
$165 million<br />
Acquired<br />
Storwize<br />
$140 million
Oracle<br />
– Success Story<br />
• S<strong>in</strong>ce 2005, 28 start-up’s <strong>in</strong>vestments.<br />
• 4 R&D centers , over 400 employees.<br />
• Integration of Sun’s R&D center <strong>in</strong> <strong>Israel</strong>.<br />
Oracle starts<br />
operation <strong>in</strong><br />
<strong>Israel</strong>.<br />
Oracle acquires<br />
Demantra for<br />
$41 Millions.<br />
Oracle acquires<br />
Prosight Inc.<br />
operation <strong>in</strong> <strong>Israel</strong>.<br />
Oracle acquires<br />
Converg<strong>in</strong> for $85<br />
Millions.<br />
1996<br />
2005<br />
2006<br />
2008<br />
2009<br />
Oracle signed an MNC’s<br />
agreement with the OCS to<br />
establish a technological<br />
support center.<br />
Oracle establish its<br />
1 st R&D center <strong>in</strong><br />
<strong>Israel</strong>.<br />
Yadata and Oblicore,<br />
owned by Oracle, are<br />
acquired by CA and<br />
Micorsoft <strong>in</strong> a total of<br />
$50 Millions.<br />
Oracle aquires<br />
HyperRoll Ltd.
<strong>Israel</strong>i Breakthroughs- Selected Examples<br />
• Comverse –Integration of voice, fax and call process functions.<br />
• VocalTec – Invented IP Telephony.<br />
• Nice Systems – First to enter Voice over IP (VoIP) Market.<br />
• RADVision – Developed core standard Protocol of VoIP.<br />
• Runcom – First to <strong>in</strong>troduce mobile WIMAX compliant ASIC.<br />
• Sun Microsystems <strong>Israel</strong> – Developed K<strong>in</strong>dle’s OS.<br />
• ECI Telecom – Introduced toll-quality <strong>in</strong>ternational traffic<br />
compression, first to enable two calls on the same phone l<strong>in</strong>e.<br />
• Modu – Developed “Credit Card” size cellular handset.
Government Support<br />
• The Law for the Encouragement of Capital <strong>Invest</strong>ments:<br />
• Competitive grant program<br />
• Tax exemption path for manufactur<strong>in</strong>g facilities<br />
• The Law for the Encouragement of Industrial R&D<br />
• Tax exemption for venture capital <strong>in</strong>vestment<br />
• Promot<strong>in</strong>g R&D Centers <strong>in</strong> the Periphery (Negev & Galilee)<br />
• Special Program - R&D centers for the f<strong>in</strong>ancial sector<br />
• The Global Enterprise R&D Cooperation Framework
Summary<br />
• <strong>Israel</strong> is a center of Innovation and technological<br />
excellence.<br />
• <strong>Israel</strong> is a lead<strong>in</strong>g Entrepreneurial society.<br />
• <strong>Israel</strong> enjoys an excellent track record <strong>in</strong> Breakthrough<br />
discoveries and <strong>in</strong>novations.<br />
• Future results are expected to improve due to the<br />
maturity of the market.<br />
• Foreign companies can cost effectively conduct cutt<strong>in</strong>g<br />
edge research <strong>in</strong> <strong>Israel</strong>.<br />
• <strong>Israel</strong>’s government and policies strongly support<br />
<strong>in</strong>vestment and economic growth.
Bubbles<br />
"What is excit<strong>in</strong>g to me<br />
about <strong>Israel</strong> is that it is<br />
the most<br />
entrepreneurial and<br />
spirited place I have<br />
come across outside<br />
the U.S."<br />
Simon Levene, Yahoo's<br />
manag<strong>in</strong>g director of<br />
corporate development<br />
"<strong>Israel</strong> is an<br />
<strong>in</strong>credible<br />
opportunity for us. It<br />
provides a growth<br />
eng<strong>in</strong>e for <strong>in</strong>novation<br />
for us."<br />
Richard Nottenburg,<br />
Motorola's executive<br />
VP & CTO<br />
"It's no<br />
exaggeration to say<br />
that the k<strong>in</strong>d of<br />
<strong>in</strong>novation go<strong>in</strong>g on<br />
<strong>in</strong> <strong>Israel</strong> is critical to<br />
the future of the<br />
technology<br />
bus<strong>in</strong>ess.<br />
Bill Gates, Founder<br />
Microsoft<br />
“Most solutions to<br />
most IT problems will<br />
come from <strong>Israel</strong>,”<br />
Gordon Graylish,<br />
VP & General<br />
Manager, Intel<br />
"<strong>Israel</strong> – a reservoir<br />
of <strong>in</strong>novation that<br />
will advance our<br />
competitiveness."<br />
." Professor Eric<br />
Re<strong>in</strong>hart, President<br />
of Siemens Medical<br />
"We were attracted by<br />
the outstand<strong>in</strong>g<br />
research and<br />
researchers here."<br />
David M. Bowser,<br />
Johnson & Johnson,<br />
VP, Corporate Office of<br />
Science and<br />
Technology March<br />
2006<br />
“There is direct <strong>Israel</strong>i<br />
<strong>in</strong>fluence on IP<br />
communication… All<br />
this technology comes<br />
out of <strong>Israel</strong> – but I<br />
don’t th<strong>in</strong>k people have<br />
realized this… If it’s<br />
go<strong>in</strong>g to happen, it’l<br />
happen <strong>in</strong> <strong>Israel</strong> first”<br />
Jeff Pulver,<br />
PulverMedia, American<br />
VoIP <strong>in</strong>dustry guru<br />
"The quantity and<br />
quality of software<br />
eng<strong>in</strong>eers <strong>in</strong> <strong>Israel</strong><br />
made it logical that<br />
we would open an<br />
R&D center here at<br />
some po<strong>in</strong>t."<br />
David Woodside,<br />
EMEA Manager,<br />
State of <strong>Israel</strong><br />
M<strong>in</strong>istry of Industry, Trade & Labor<br />
<strong>Invest</strong>ment Promotion Center<br />
5 Bank <strong>Israel</strong> St., Kiryat Ben-Gurion Jerusalem, <strong>Israel</strong><br />
www.<strong>in</strong>vest<strong>in</strong>israel.gov.il <strong>in</strong>vest<strong>in</strong>israel@moital.gov.il<br />
Tel: +972-2-6662607 Fax:+972-2-6662983
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