Israel's hi-tech industry bounces back

Greg Myre / Dec 26, 2005, 23:33 IST

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The Intel Corporation, the world's largest chip maker, announced this month that it would invest $3.5 billion to build a new plant.

KIRYAT GAT, ISRAEL: Israel's high-tech sector is having its best year since the dot-com implosion in 2000, and the evidence includes this working-class town, where bulldozers are rapidly clearing acres of land for a huge, state-of-the-art chip-making plant.
The Intel Corporation, the world's largest chip maker, announced this month that it would invest $3.5 billion to build a new plant, adjacent to an existing one that makes Pentium 4 chips, at an industrial park in this town in southern Israel, which has long struggled economically despite the money poured into it.
Intel already has six design and production facilities scattered across Israel and more than 6,000 workers, making it one of the country's largest private employers. It will be adding at least 2,000 jobs at the new plant, which will produce 12-inch chip wafers, the company says.
"Intel has a long history of high-tech manufacturing in Israel, and this is a natural continuation of that," said Alex Kornhauser, the general manger of Intel's operations in Israel. "When the manufacturing requires highly skilled people, we believe we have a competitive advantage here."

The Intel project is a leading example of the overall resurgence of the high-tech sector, which generates more than $13 billion of annual exports, or about 40 per cent of Israel's total exports, according to government figures.
From large manufacturers such as Intel to start-ups financed by venture capital firms in the Tel Aviv suburb of Herzliya, the industry appears to have largely recovered after taking a pounding five years ago. Israel now has more than 70 companies listed on the Nasdaq, more than any other country outside of the United States.

With high-tech playing a significant role, Israel's economy is expected to grow about 5% this year, after growing around 4 per cent last year. This follows three years of economic turbulence during which the country suffered one of its worst recessions.
Throughout the 1990's, the technology industry modernised and reshaped an economy with socialist roots and many large, state-run companies. The sector established a reputation for producing innovative start-up firms that are often incorporated in the United States.
But in 2000, Israel was hit not only by the dot-com collapse, but also by the Palestinian uprising. "Before the crash, money was just flowing here, madly," said Joseph Morgenstern, a consultant who publishes the Israel High-Tech and Investment Report.
NYT News Service

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