Propelled by military compulsions, the Israeli electronics industry has emerged as the world’s second Silicon Valley. It has made its mark on the global level with the ability to incorporate varied industries and components in interdisciplinary areas.
Concerted innovations and cease-less endeavour in the field of electronics have transformed Israel into the world’s second Silicon Valley. The application of local engineers and scientists in devising leading-edge technologies and products is largely responsible for the changed face of electronics in Israel today. Coupled with the entrepreneurship of its managers, electronics has become the country’s most rapidly-growing industry. Also, Israel’s universities are acting as a catalyst by providing quality education in the field of electronics. Undoubtedly, the peace process and free-trade agreements with the US, Canada, EU and EFTA are the other factors that have contributed to its high growth. Electronics in Israel is a high value-addition sector. The average value-addition is 68 per cent in this sector as compared to 42 per cent in the rest of the Israeli industry. There are 43,400 people employed in this industry, including 24,800 engineers of whom 14,000 are university graduates. Twelve per cent of the employees are involved in R&D activities. The output per employee has grown consistently and stands at over $164,000 per employee for 1997-98 as against $63,380 in 1987. Positive trends in the telecommunications sector—specifically in communication networks and semiconductors—are to a large extent responsible for the dramatic rise in output levels. The dynamic growth in Israel’s electronics industry can be linked to the country’s strategic need for defence and electronic warfare systems. However, in recent decades there has been a shift from the military to the civilian sector and technology has been adapted for commercial applications.
Electronics Everywhere
The electronics sector in Israel excels at the ability of incorporating varied industries and components in interdisciplinary areas. Textile, printing, agriculture and medicine are a few of the industries that now have electronics at their core. In the field of communications, R&D-based applications include digital processing, transmission and enhancement of images, speech and data. The products range from advanced telephone exchanges to voice systems and telephone-line doublers. Israel is today a world leader in fibre optics, electro-optic inspection systems for printed circuit boards, thermal imaging, night-vision systems and electro-optic-based robotic manufacturing systems. The country has the world’s largest concentration of researchers and skilled manpower in electro-optics and lasers. A high level of specialisation has been achieved in the areas of electro-optic testing, measurement and imaging systems, laser materials processing, electro-optical component manufacturing and medical systems. Among the important companies in the field are Indigo, Scitex, Orbotech, ELOP, Lanoptics, Elbit and Laser Industries. Education in schools is enhanced by a variety of computer-aided instruction systems. Israeli-made computer-based imaging systems are also widely exported. While some of Israel’s software products are designed for use on mainframe computers, most have been developed for small- or medium-sized workstations.
Software Design
Israel has also emerged as a major software design centre. It is significant to note that the Israeli and Indian software industry started off at the same time, but the market value of Israel’s software listed on NASDAQ is $50 billion today. Further, one may add to this a conservative $10 billion in companies that are listed in the country or valued in private acquisitions. Software R&D centres in Israel include setups of multinationals such as Microsoft, IBM and Digital to name a few. Scores of Israeli companies are operating in the US market through joint ventures, OEM and marketing agreements.
Telecommunications
Telecommunications and datacommu-nications are the salient strengths of Israel’s electronics industry. This includes PABXs and access networks, satellite terminals, wireless LANs, ISDN terminals, ATM, LANB switches and SDHI (SONET), sophisticated antennas, voice and handwriting recognition systems, frequency hopping paging systems, USAT, video encryption and compression, vocoders, HDSL (2mbps), ADSL (6mbps), VHDSL (100mbps), small satellites and Leo launchers, CATV communications, etc. Telecommunications account for over 30 per cent of the total electronics industry in the country. The leading Israeli names in telecommunications are Elbit Computers, Rad Data Communications, ECI Telecom and Bezeq. Many top-notch companies are known to be seeking joint ventures in India. Bezeq is already in India as a service provider. Rad is being represented in India through the Bangalore-based MRO-Tech. India’s potential growth in telecom is a competitive area where Israeli companies can provide service and technology. Israel’s industry was hard pressed in the 60s to develop its own technology-base for the upkeep of its military machinery. But later, when there was lesser accent on military activities, large companies, which had serviced the needs of the defence, had to look for other markets. And in the 80s, these companies began to make an impact on the civilian sector. A host of start-ups tasted commercial success, marking a wave of high-tech debuts that eventually culminated in today’s vibrant export-driven telecommunications industry. Tadiran is a classic example of a company’s transition from military to civilian applications. It offers a unique wireless telephone system that is based on spread spectrum and the frequency-hopping technology in which the frequency changes at random at about 500 jumps a second. Tadiran had developed this technology for military purposes but today it is used in cabs and ambulances. The Electronics Group (TEG) is a world leader in defence electronics and aerospace applications, providing a full range of products, systems and services from concept-evaluation through programme deployment and ongoing integrated logistical support. TEG’s products include complete lines of missiles, radars, weapons and ammunition-control systems. TEG also produces point defence systems, optronic sensors and navigation systems. Israel is also a fairly large player in IT—the Internet I in particular. Multilingual Internet communication, voice and video communications over the Internet, wireless Internet access and communications, network management software, encryption technology, imaging and pattern recognition systems, fault-detection and analysis software are on offer by Israeli companies. Leading companies in IT and Internet are VocalTec, NetManage, Aladdin Knowledge Systems, Accent/Kivun, VdOnet, Ubique and Disc. Internet security products are their primary wares. Checkpoint provides Firewall, an Internet security product, which prevents a breach by creating a ‘wall’ between a trusted network and the Internet, restricting sites that employees can visit. Companies are also offering safe remote access software transfer. The Israeli electronics industry has also distinguished itself through innovations in multimedia. Over 70 firms are engaged in CD-ROM software development of which 90 per cent is exported. Prominent companies in this area are JeMM, Pixel, Edusoft, Edunetics, Onyx, Interactive, Levitech, Plastronics, Glymph, Multimedia, Makhshevet and Optibase.
Technology Tie-ups and JVs
In 1993, the Israel Export Institute signed a memorandum of understanding (MoU) with an Indian consultancy firm, Technova India, for the promotion of Israeli electronics technology in India. Under the terms of the MoU, Technova chose to confine itself to identifying and aiding collaborations and transfer of technology in the civil area. It was around the same time that Electronics Industries (ELOP), the Israeli market leader in thermal imaging and other esoteric areas, opened an office in India. ELOP made an unpublicised entry into India through a technology tie-up with an NRI-promoted company in the Noida Export Processing Zone. ELOP’s technology offered the capability of linking a computer-controlled vision system to a fruit- or vegetable-processing line to automatically sort and grade fruits or vegetables by size, colour and quality. That year also saw a number of Indo-Israel joint ventures in floriculture and drip-irrigation industries. However, the drift is now more in the high-tech direction of telecommunications and electronic machinery, medical equipment, education software and digital printing technology. These products constituted over 15 per cent of Israel’s exports in 1998 and an increase of 45 per cent over similar exports in 1997. A number of joint ventures are now being set up in areas like manufacture of high-speed modems, voice-mail systems and fibre optics. Even the regional and development centres for such ventures are being set up in India. It is significant to note that even low-profile companies like Gilat Satellite Networks are determined to tap India’s potential in communications through VSATs. Gilat is in the process of setting up a liaison office in Delhi and Magic Software is all set to cash in on the Indian ‘ERP solutions’ market. Alladin Knowledge Systems caters mainly for the software-security-against-piracy requirements in the market. Even giants like ELBI Systems are vying for this segment. A small but significant beginning was made at building tie-ups between the Israeli and Indian electronics industry in 1993. This association has now penetrated numerous areas that promise high growth in volume and value.
Government Assistance
Israel has an incubator programme, which has been a key factor in promoting inventors and innovators. This programme was initiated in 1992 to absorb emigrant scientists. Any Israeli national can apply for assistance on the basis of a promising proposal and the assurance of completion of the prototype within two years. Another such setup is run by Wiezmann Institute, which receives an annual budget from the Israeli government. The budget allocation in 1998 was $160 million. The institute encourages research even on technology that may not have immediate practical applications. It also offers a programme for commercial inventions that it operates through a separate company, Yeda. Under Yeda, researchers need not develop a prototype compulsorily as is mandatory in the incubator programme.
http://www.electronicsforu.com/electronicsforu/Articles/ad.asp?url=/efylinux/efyhome/cover/articles-sep/israel.htm&title=Electronics%20Industry%20in%20Israel
