ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the January 2007 issue


Defining Events of 2006

The Israeli high-tech sector experienced its best year ever, in 2006. Merger and acquisition activity was marked by small and big deals. The Warren Buffett acquisition of Iscar, a $4.0 billion deal, San Disk's purchase of M-Systems for $1.5 billion, and Hewlett-Packard's purchase of Mercury Interactive set a new  record for foreign investments in Israel.

The Tel-Aviv Stock Exchange Index reached an all-time record high. Foreign investors were major participants. They not only enjoyed rising prices but also a strong Israeli shekel, which added to foreign investors' yields.

Following the successful firing of Arrow anti-missile system, Israel sees the Arrow program as a response to the realistic threat of ballistic missiles in the region.

Intel confirmed that it will build a new $3.5 billion facility. It is expected to go on stream in the second half of 2008. The Israeli government has approved a $525 million grant towards the project.

The Red Herring technology magazine has listed six Israeli companies on its roster of 100 most promising small caps, all listed on Nasdaq.

The first Israel-China investment fund was formed.

Johnson & Johnson has formed a joint research program with Weitzmann Institute's Yeda.

The Corner Shot, a novel gun was unveiled. Corner Shot is a gun with a camera and a special barrel that swings on a hinge, allowing the shooter to observe and engage the enemy from around a corner.

1.2 million households had an Internet hook up, a growth of nearly 10 per cent from the preceding year.

Google sets up its first research and development in the Middle East in Haifa.

Billionaire investor Warren Buffett acquires 80 per cent of Iscar Metalworking Companies for $4.0 billion. For Mr. Buffett it was the first major acquisition of a company outside the United States. The deal was initiated by an e-mail from Eitan Wertheimer, the son of Iscar's founder Stef Wertheimer, which simply said "We have a company for sale".

The American Nasdaq stock market launched an index of the Israeli companies listed on its exchange.

July marked the beginning of the War in Lebanon. Israel could not find an answer to the 1,000 katyushas that landed in its territory. The war did not impact the Israeli high-tech sector as business continued, as usual.

San Disk, the world's largest manufacturer of memory cards, used in portable devices, acquired Israel's M-Systems Flash Disk Pioneers for $1.55 billion.

Hewlett-Packard  purchases Israeli Mercury Interactive for $4.5 billion.

Foreign investment in Israeli start-ups ballooned to $2.2 billion.

Epix Pharmaceutical concluded a $1.2 billion deal with Glaxo Smith Kline.

Intel introduces its quad-core processor into the market place. The revolutionary processor was developed at Intel's Haifa R & D facility.

Israel's telecommunications exports reached $3.3 billion.

2006 was Israel's best year in terms of economic achievements. Bank of Israel Governor Prof. Stanley Fischer predicted that the growth for 2006 would reach 4.6% and he predicted an additional 4% growth in 2007.

Barring any major political upheavals Israel is poised to attract substantial additional foreign investment and  hopes to record another stellar performance in 2007.

We wish all of our subscribers and friends best wishes for the holiday season and New Year.



Reprinted from the Israel High-Tech & Investment Report January 2007

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