The Israel High Tech Industry

ISRAEL • Population: 7.3 M • Households: 1.8 M • Urban Population: 91.5% • Area - grand total 22,145 sq. km • GDP Per Capita: US $ K$31,767 Unemployment 6.8% • Fixed line Telephone Subs – 2.9M • Mobile – 7.7M (106% penetration) • Internet Users: 2.5M Gross domestic product Валовой внутренний продукт

Israel Is The Leader Among Non US Countries Listed on NASDAQ 71 Canada 59 U.K. 10 9 Netherlands 8 Hong Kong Japan 8 Singapore 7 France 6 S. Korea 5 India 3 Taiwan 2 Germany 2 10 20 30 40 50 60 70 80 Number of Companies Listed on NASDAQ Source: NASDAQ as of September 2007.

Venture capital : keren hon/sikun developed since 1993 following “yozma” project

Proportionately, Israel spends more money on R&D than any other country in the world

Engineers graduates per year in 2006 Israel 8000 engineers /year (pop 7.2M) 0.11% France 30 000 engineers/year, (pop 64M) 0.046% UK 25 000 engineers/year (pop 60M) 0.04% USA 74 000 engineers/ year (pop 300M) 0.024% China 600 000 engineers/year (pop 1.3Bn) 0.0046% India 400 000 engineers/year (pop 1.1Bn) 0.036% Japan 90 000 engineers/year (pop 127M) 0.07%

The Role of the Government The government is hugely supportive of Israel’s hi-tech sector and has played a crucial role in its development. Its main instrument of innovation is the Office of the Chief Scientist The most important government initiatives include: The Yozma Program for jump-starting the venture capital sector Israel-US BIRD Foundation - has provided $245M to 740 joint R&D projects - products developed have generated sales of over $8B The R&D Fund The Technological Incubators Program The Magnet Program for creating consortia of industry and academia Bird = Bi national R&D Foundation

The Role of the Government Favorable Regulatory Environment Strict international standards for protection of trademarks, patents and intellectual property of all kinds Investor friendly comprehensive legal protection of foreign companies an advanced banking and financial sector favorable tax treatment for foreign investors worldwide taxation treaties and free trade agreements

Foreign Investments in Israel

Foreign Investment in Israel 2006/7

Foreign Investment in Israel 2006/7 Med Impuls 50$M 40$M 12$M

Foreign Investment in Israel 2006/7

FOREIGN ELECTRONIC SUBSIDIARIES IN 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 Flextronics* Motorola* Lucent Technologies Avaya Nortel* Siemens Alcatel Philips Ericsson Nokia ADC Qualcomm Applied Materials KLA - Tencor Kulicke & Soffa* BAE Systems Ind. Astronautics Sanmina-SCI* Berkshire Alcatel Lucent Verifone* Kodak* Nortel SanDisk EMC Stryker TA associates Google Xerox Sun CA Microsemi AMS Pricer EPIX Etc… * Design & MFG

VC in Israel

Israel’s Hi-tech

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

EUROPE USA Rest of the world ASIA ISRAEL ELECTRONICS & INFORMATION INDUSTRIES 2006 - 18,700 M$ 36% 39% EUROPE USA 5% 20% Rest of the world ASIA

Medical Aerospace & Defence Communications Computer Hardware Consumer Industrial Aftercare Security Applications Semiconductor Transport

Medical Systems Industrial Equipment ISRAEL ELECTRONICS & INFORMATION INDUSTRIES 2007 - 20,700 M$ Medical Systems Civilian Comm. & Telecomm. 8.8% 22.9% Software 23.7% 13.4% 13.4% 17.8% Components Defense Systems Industrial Equipment

TELECOMMUNICATIONS EQUIPMENT 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 WiMAX Video-Compression, Video-Conferencing & Video Networks 23% CHECKPOINT SCOPUS OPTIBASE ZORAN TELRAD ECI TADIRAN RAD GILAT MOTOROLA ALVARION etc..

MAJOR MILITARY SYSTEMS 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 Platforms (Aircraft, Tanks…) Retrofit and Upgrading Navigation and Positioning Equipment Tactical Airborne, Naval and Ground Communications Sights and Night Vision Simulation and Training Equipment 13.7% ELBIT IAI ELTA ELISRA MAGAL NICE TADIRAN RAFAEL AERONAUTICS BVR etc,…

MAJOR INDUSTRIAL EQUIPMENT Computerized Production Equipment Computerized Control Systems Test Equipment Training and Education Systems Consumer Products Security Equipment 13..4% Kodak-CREO Degem MER Group LIPMAN-Verisign M-Systems NDS ORBOTECH RAPAK VISONIC CROW KP electronics Motorola Magal etc…

MAJOR MEDICAL EQUIPMENT Imaging and Diagnostic Equipment Surgical and Treatment Equipment Monitoring Systems 8,8% ELRON Given Imaging Lumenis Philips CADENT BioView Algotec GE Rimed Oridion etc…

ELECTRONIC COMPONENTS 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 13,4 % Eltek NDS Vishay Intel Freescale Texas Instrument Zoran DSP group Analog Devices etc..

SOFTWARE AudioCodes BVR CyOptics ECI Checkpoint IBM Formula Radware INTERNET MULTIMEDIA SOFTWARE – PRODUCTS SOFTWARE – TURNKEY PROJECTS SOFTWARE - SUBCONTRACTING 23.7% AudioCodes BVR CyOptics ECI Checkpoint IBM Formula Radware Comverse Amdocs etc..

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