By Ilan Furman, CFA
Israel, the country most known for its tech achievements, is in the midst of war against terror. Though current situation is challenging, we continue to witness the resilience, global integration and the long-term potential of Israel’s tech ecosystem.
Israel’s tech ecosystem in the midst of the war
Since October 7, following a deadly attack by Hamas, Israel in general and its tech sector in particular are under stress. Currently many employees are drafted for reserves, and the country faces limited travel capability and geopolitical instability. However, amid all these challenges, the sector continues not only to pursue its business objectives but also supporting civil and humanitarian objectives.
Most of the activity is done on the civil font – some tech companies converted their offices to house refugees from the Southern and Northern Israel, some enabled free access to their products and services, giving relief to the local population. On the humanitarian front there is activity as well. For example, companies are applying different methodologies to aid, locate and bring back the hostages.
Israel’s tech segment also plays a role in defending Israel. This leads to significant innovation in defense. The Iron Dome is in the forefront of such innovation. This is defense system that helps protect cities and civilians by intercepting and destroying rockets in mid-air. This system was actively used in savings lives and generated a lot of interest around the world.
From business continuity perspective, there are several factors supporting the sector in these challenging times:
- Israel’s tech segment is very global with over 450 multinationals have presence in Israel and employ about 70K employees. Examples include Google, Microsoft, Amazon, Nvidia, Meta, and many others.
- Israeli start-ups are global companies – they sell their products and services around the world. Therefore, they are quite resilient to the economic and political scenario in Israel.
- Talent – the human talent, the key driver and contributor to the Israel’s tech locomotive, is present and extremely motivated.
- Remote work – post covid and as a start up nation – remote work solutions are extremely effective in Israel’s tech environment.
Israel tech segment is very integrated with global tech segment – examples:
The Israeli tech segment continues to be very integrated with global tech segment. This is a key contributor to the resilience of this sector. Reviewing several examples below, indicating and supporting the expectation for a prosperous trajectory.
- Many drivers around the world are very grateful for Waze, the GPS navigation app. This application was developed in Israel and acquired by Google in 2013.
- Israel is a leader in AG tech. The country has developed advanced irrigation techniques, drought-resistant crops, and precision agriculture solutions that help address global food security issues.
- Mobileye, an Israeli company specializing in the innovative field of autonomous driving technology was acquired by Intel for $15.3 billion in 2017.
- Currently, when the world is following closely the AI trend and the chip maker Nvidia, it’s important to remember Mellanox – an Israeli company that played a significant role in AI adoption providing the needed high performance solutions that support the scalability of AI and machine learning data load. Nvidia ended up buying Mellanox in 2019 for $6.9 billion.
Even in uncertain times, Israel remains a true technology power house providing opportunities for investors around the world.
