1. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 1 Israel Association of Electronics & Software Industries www.iaesi.org.il IAESI

2. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 2 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 - 2006

3. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 3 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

4. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 4 ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES SALES & EXPORT (M$) ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES SALES & EXPORT (M$) EXPORT DOMESTIC 4,596 5,310 6,000 6,840 7,800 9,980 10,380 11,530 14,750 15,500 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

5. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 5 ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EMPLOYMENT AND MANPOWER STRUCTURE 39,500 42,700 45,000 47,700 50,500 53,400 56,200 58,800 66,300 62,000 54,800 EMPLOYEES 0 000 10, 20, 30, 40, 50, 60, 70, 53,500 57,200 59,500 62,000

6. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 6 ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EXPORTS BY INDUSTRY GROUP 2006 – 16,000 M$ ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EXPORTS BY INDUSTRY GROUP 2006 – 16,000 M$ Civilian Comm. & Telecomm. Components Industrial Equipment 22.9% 13.4% 17.8% 13.4% Defense Systems 23.7% Software 8.8% Medical Systems

7. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 7 Fiberoptic & Photonic Systems SDH, SONET Access – XDSL ATM, Frame Relay IP Networks – Voice, Video, Data, Multimedia Routers, Load balancing Test Equipment, Q uality Monitoring of Networks 3G Applications Home Networks Storage Area Networks Wireless Local Loop, Microwave VPN, Firewalls Video-Compression, Video-Conferencing & Video Networks TELECOMMUNICATIONS EQUIPMENT 22.9%

8. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 8 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 SYSTEMES 13.4%

9. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 9 Computerized Production Equipment Computerized Control Systems Test Equipment Training and Education Systems Consumer Products Security Equipment MAJOR INDUSTRIAL EQUIPMENT 17.8%

10. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 10 Imaging and Diagnostic Equipment Surgical and Treatment Equipment Monitoring Systems MAJOR MEDICAL EQUIPMENT 8.8%

11. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 11 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 COMPONENTS 13.4%

12. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 12 INTERNET MULTIMEDIA SOFTWARE – PRODUCTS SOFTWARE – TURNKEY PROJECTS SOFTWARE - SUBCONTRACTING SOFTWARE 23.7%

13. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 13 ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EXPORTS BY REGION 2006 – 16,000 M$ ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EXPORTS BY REGION 2006 – 16,000 M$ 35% USA 38% 5% 22% EUROPE ROW ASIA

14. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 14 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 ISRAEL

15. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 15 Scientists & Engineers per 10,000 pp

16. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 16 R&D in Electronics and ICT as % of GDP Source: IVC Research Center, VenfureOne

17. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 17 Business Week Oct 11 2004 * Total annual new bachelor’s degree or higher Israel R&D in first place with 4.7% of GDP

18. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 18 Main Fields of Activities: n Telecommunications n Information Technologies n Semiconductors for… n Medical Conversion of Military Technologies to Civilian Products. START-UPS }} ile Mobile, 3G, Broadband, Wi Fi, Internet, Data Comm, Security, Wi Max ile Mobile, 3G, Broadband, Wi Fi, Internet, Data Comm, Security, Wi Max }} Fabless }} New Applications to Reduce Health-Care Costs

19. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 19 Highlights 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)

20. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 20 FOREIGN ELECTRONIC SUBSIDIARIES IN ISRAEL (PARTIAL LIST) 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 Motorola Lucent Technologies Avaya Nortel Siemens Alcatel Philips Ericsson Nokia ADC Qualcomm Applied Materials KLA - Tencor Kulicke & Soffa BAE Systems Ind. Astronautics

21. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 21 Foreign Investments in Israel 2006 4,000$M 800$M 300$M 150$M 140$M 4,500$M 1,500$M

22. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 22 Foreign Investments in Israel 2006 (cont.) 90$M 76$M Med Impuls 50$M 40$M 12$M 90$M

23. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 23 CRAIG BART: former Intel CEO ( visiting Israel ) n “Apart from the 6,000 jobs that we have provided here, in my opinion the contribution to Israel lies in the fact that Intel has attracted other companies to invest in Israel and to create an entrepreneurial environment. Globally speaking, Israel is in 3rd place in terms of IP and is a very good place for opening businesses. The level of education in Israel has helped us expand. Israel’s ability to supply very good scientists has helped us, and the government’s positive attitude has helped us attract investments.”

24. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 24 Bill Gates, the Microsoft CEO, made his first trek to Israel “Considering the density of Israeli start-ups and local successes, Israel is like a bit of Silicon Valley.

25. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 25 CEO Ed Zander visit to Israel CEO Ed Zander visit to Israel n -----Original Message----- From: Zander Ed-AEZ111 Sent: Sunday, November 14, 2004 10:57 PM To: Yanay Elisha-BCMS54; Nottenburg Richard-arn021 Cc: Brown Greg-CGB025 Subject: RE: Your visit to Israel Elisha- I had a great time. You and your team did an outstanding job. I was continually impressed by their knowledge of the business, opportunities and issues and great work ethic. Motorola has a jewel in it it's Israeli operation thanks to you and your senior team. Hope to see you soon. Regards, ed n ed@motorola.com 847-576-3000

26. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 26 Asked how come he chose Israel as his first investment outside America, Buffett's response was: "Some Americans came looking for oil, so they didn't stop in Israel. We came looking for brains, so we did stop in Israel."

27. ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES - 2007 27 ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES ISRAEL ASSOCIATION OF ELECTRONICS & SOFTWARE INDUSTRIES Thank You More information at our Website: www.iaesi.org.il