israel association of electronics & software industries

1ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Israel Association of Electronics & Software Industries

www.iaesi.org.il

IAESI

2ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

• Population: 7,707,000

• Households: 1.8 M

• Urban Population: 91.5%

• Area - grand total 22,145 sq. km

• GDP: US $ ~140.5 B

• GDP Per Capita: US $ ~19.9 K

• Fixed line – 3,200,000

• Mobile – 7,757,000 subscribers

• Internet – Broadband subscribers – 1,250,000

ISRAEL IN A GLANCE - 2006ISRAEL IN A GLANCE - 2006

3ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Beginning: 1967 - after Military Embargo Following the Six Day War

Pattern of Growth: Maintenance Subcontracting Build to Print Build to Specifications Own R&D

Civilian Equipment: Spin-off from Defense Products & Technologies

Multinationals: R&D Center Production

THE ELECTRONIC INDUSTRIES IN ISRAEL THE ELECTRONIC INDUSTRIES IN ISRAEL

4ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES SALES & EXPORT (M$)

ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES SALES & EXPORT (M$)

EXPORT

DOMESTIC

2,79

51,

801

3,37

51,

935

3,97

02,

030

4,63

02,

210

5,48

02,

320

6,70

02,

280

8,05

02,

330

9,13

02,

400

13,0

002,

500

12,2

502,

500

10,7

402,

300

10,8

702,

300

13,4

002,

400

14,2

002,

500

16,0

002,

700

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

4,5965,310

6,000

6,840

7,800

9,980

10,380

11,530

14,75015,500

13,040 13,170

15,800

16,700

18,700

0

2000

4000

10,000

8000

6000

18,000

16,000

14,000

12,000

20,000

5ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EMPLOYMENT AND MANPOWER STRUCTURE

ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EMPLOYMENT AND MANPOWER STRUCTURE

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

39,50042,700

45,00047,700

50,50053,400

56,20058,800

66,300

62,000

54,800

EMPLOYEES

0

000

000

000

000

000

000

000

10 ,

20 ,

30 ,

40 ,

50 ,

60 ,

70 ,

53,500

57,20059,500

62,000

6ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

ISRAEL ELECTRONICS & SOFTWARE INDUSTRIESEXPORTS BY INDUSTRY GROUP 2006 – 16,000 M$ISRAEL ELECTRONICS & SOFTWARE INDUSTRIESEXPORTS BY INDUSTRY GROUP 2006 – 16,000 M$

Civilian Comm. & Telecomm.

Components

IndustrialEquipment

22.9%

13.4%17.8%

13.4%

DefenseSystems

23.7%Software

8.8%

MedicalSystems

7ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Fiberoptic & Photonic Systems SDH, SONET Access – XDSL ATM, Frame Relay IP Networks – Voice, Video, Data, Multimedia Routers, Load balancing Test Equipment, Quality Monitoring of Networks 3G Applications Home Networks Storage Area Networks Wireless Local Loop, Microwave VPN, Firewalls Video-Compression, Video-Conferencing & Video Networks

TELECOMMUNICATIONS EQUIPMENTTELECOMMUNICATIONS EQUIPMENT

22.9%

8ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Missiles and Guided Weapons Anti Aircraft and Anti-Missiles Systems Radars - Airborne, Naval, Ground EW Equipment Fire Control Systems Command, Control, Communications and Intelligence Systems Avionic Equipment Aircraft Retrofit and Upgrading Navigation and Positioning Equipment Tactical Airborne, Naval and Ground Communications Sights and Night Vision Simulation and Training Equipment

MAJOR MILITARY SYSTEMESMAJOR MILITARY SYSTEMES

13.4%

9ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Computerized Production Equipment

Computerized Control Systems

Test Equipment

Training and Education Systems

Consumer Products

Security Equipment

MAJOR INDUSTRIAL EQUIPMENTMAJOR INDUSTRIAL EQUIPMENT

17.8%

10ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Imaging and Diagnostic Equipment

Surgical and Treatment Equipment

Monitoring Systems

MAJOR MEDICAL EQUIPMENTMAJOR MEDICAL EQUIPMENT

8.8%

11ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

SEMICONDUCTORS Design Centers Manufacturing Facilities PASSIVE COMPONENTS Resistors & Networks Capacitors Transformers Batteries P.C. Boards ACTIVE COMPONENTS Tubes Power Supplies Oscillators Detectors Microelectronic Components Microwave Components

ELECTRONIC COMPONENTSELECTRONIC COMPONENTS

13.4%

12ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

INTERNET

MULTIMEDIA

SOFTWARE – PRODUCTS

SOFTWARE – TURNKEY PROJECTS

SOFTWARE - SUBCONTRACTING

SOFTWARESOFTWARE

23.7%

13ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

ISRAEL ELECTRONICS & SOFTWARE INDUSTRIESEXPORTS BY REGION 2006 – 16,000 M$ISRAEL ELECTRONICS & SOFTWARE INDUSTRIESEXPORTS BY REGION 2006 – 16,000 M$

35%

USA

38%

5%22%

EUROPE

ROW

ASIA

14ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Strengths: • Entrepreneurial Spirit • Highly Qualified Scientists & Engineers • Proven Track Record

 Engines: • Government Support (R&D, Investment) • Venture Capital

Results: • Strong R&D • New Technologies and Applications • Numerous New Start-ups • International Involvement (Acquisitions &

Subsidiaries)

HIGH-TECH CHARACTERISTICS IN ISRAELHIGH-TECH CHARACTERISTICS IN ISRAEL

15ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Scientists & Engineers per 10,000 Scientists & Engineers per 10,000 pppp

0

20

40

60

80

100

120

140

16ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

R&D in Electronics and ICT as % of GDPR&D in Electronics and ICT as % of GDP

0

1

2

3

4

5

%% R&D per GDP% ICT R&D per GDP

Source: IVC Research Center, VenfureOne

17ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Business Week Oct 11 2004

* Total annual new bachelor’s degree or higher

Israel R&D in first place with 4.7% of Israel R&D in first place with 4.7% of GDPGDP

18ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Main Fields of Activities:Main Fields of Activities:

TelecommunicationsTelecommunications

Information TechnologiesInformation Technologies

Semiconductors for…Semiconductors for…

MedicalMedical

Conversion of Military Technologies to Civilian Products.Conversion of Military Technologies to Civilian Products.

START-UPSSTART-UPS

}}}} Mobileile, 3G, Broadband, Wi Fi, Internet,Data Comm, Security, Wi Max

Mobileile, 3G, Broadband, Wi Fi, Internet,Data Comm, Security, Wi Max

}}}} FablessFabless

}}}} New Applications to Reduce Health-Care CostsNew Applications to Reduce Health-Care Costs

19ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Highlights in Israeli InnovationHighlights in Israeli Innovation

Pentium (Intel) Centrino (Intel) Telecom Billing (Amdocs) Call Center Logging (Nice/Verint) Voice Mail (Comverse) Instant Messaging (ICQ, Ubique) PC Board Inspection (Orbotech) VoIP (Vocaltec) Two-bit per cell Flash Memory (Saifun) Disk on Key (M-systems) Firewall (Checkpoint) SW Performance (Mercury Interactive) AntiVirus (Alladin, Commtouch…) Virtual Colonoscopy (Given Imaging)

20ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

FOREIGN ELECTRONIC SUBSIDIARIESIN ISRAEL (PARTIAL LIST)

FOREIGN ELECTRONIC SUBSIDIARIESIN ISRAEL (PARTIAL LIST)

Intel Microsoft IBM Sun Microsystems Cisco 3 Com HP Texas Instruments National S.C ST Microelectronics Infineon Analog Devices Vishay AVX (Kyocera) General Electric Philips Medical

Motorola Lucent Technologies Avaya Nortel Siemens Alcatel Philips Ericsson Nokia ADC Qualcomm Applied Materials KLA - Tencor Kulicke & Soffa BAE Systems Ind. Astronautics

21ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Foreign Investments in Israel 2006Foreign Investments in Israel 2006

4,000$M

800$M

300$M

150$M

150$M

140$M

4,500$M

1,500$M

22ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Foreign Investments in Israel 2006 Foreign Investments in Israel 2006 (cont.)(cont.)

90$M

76$M

Med Impuls50$M

40$M

12$M

90$M

24ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Bill Gates, the Microsoft CEO, made his Bill Gates, the Microsoft CEO, made his first trek to Israel first trek to Israel

“Considering the density of Israeli start-ups and local successes, Israel is like a bit of Silicon Valley.

25ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

CEO Ed Zander visit to CEO Ed Zander visit to IsraelIsrael

-----Original Message----------Original Message-----From:From: Zander Ed-AEZ111 Zander Ed-AEZ111 Sent:Sent: Sunday, November 14, 2004 10:57 PM Sunday, November 14, 2004 10:57 PMTo:To: Yanay Elisha-BCMS54; Nottenburg Richard-arn021 Yanay Elisha-BCMS54; Nottenburg Richard-arn021Cc:Cc: Brown Greg-CGB025 Brown Greg-CGB025Subject:Subject: RE: Your visit to Israel RE: Your visit to Israel

Elisha- I had a great time. You and your team did an Elisha- I had a great time. You and your team did an outstanding job. I was continually impressed by their knowledge outstanding job. I was continually impressed by their knowledge of the business, opportunities and issues and great work ethic. of the business, opportunities and issues and great work ethic. Motorola has a jewelMotorola has a jewel in it it's Israeli operation thanks to you and in it it's Israeli operation thanks to you and your senior team. Hope to see you soon. Regards, edyour senior team. Hope to see you soon. Regards, ed

ed@motorola.com ed@motorola.com 847-576-3000 847-576-3000

26ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

Asked how come he chose Israel as his first investment outside America, Asked how come he chose Israel as his first investment outside America, Buffett's response was: "Some Americans came looking for oil, so they Buffett's response was: "Some Americans came looking for oil, so they

didn't stop in Israel.didn't stop in Israel. We came looking for brains, so we did stop in Israel."We came looking for brains, so we did stop in Israel."

27ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007

ISRAEL ASSOCIATION OFELECTRONICS & SOFTWARE INDUSTRIESISRAEL ASSOCIATION OFELECTRONICS & SOFTWARE INDUSTRIES

Thank YouMore information at our Website:

www.iaesi.org.il