Intel: 10% of Israel’s 2012 exports were ours

The symbiosis between the State of Israel and Intel is extensive and unique, paying off big for both sides, company officials say

(L to R) Top Intel Israel staff Maxine Fassberg, Mooly Eden, and Roni Friedman at Intel Israel's annual press event (Photo credit: Courtesy)
(L to R) Top Intel Israel staff Maxine Fassberg, Mooly Eden, and Roni Friedman at Intel Israel's annual press event (Photo credit: Courtesy)

If high-tech is the engine of Israel’s exports, then Intel is the engine of the country’s high-tech exports; in 2012, high-tech exports constituted nearly half of Israel’s total exports — and 20% of those high-tech exports were by Intel Israel. Put another way, Intel was responsible for 10% of all of Israel’s exports, technology or otherwise, in 2012.

In other words, Intel is a big deal in Israel. But it goes both ways, company officials said Sunday. “Intel Israel is on the cutting edge for the advanced technologies going into many of Intel’s new products,” Mooly Eden, president of Intel Israel, told reporters at the company’s annual press briefing. “This past year, 140 new Ultrabook notebooks, some with advanced touch technology, were introduced, and they all utilize the Ivy Bridge processor, which was developed in Israel.”

Intel Israel’s 2012 exports (the vast majority of which were from the company’s chip fabrication plant in Kiryat Gat, said plant director Maxine Fassberg) amounted to $4.6 billion in 2012, out of a total of $21.5 billion in exports from the high-tech sector. Overall, Israel exported $46 billion in goods and services (excepting diamonds) in 2012, meaning that Intel, by itself, was responsible for 10% of Israel’s total exports.

Besides helping keep Israel’s export balance sheet in the black, Intel Israel continued to be Israel’s largest private employer in 2012. The company hired 760 new employees in 2012, bringing its total number of workers in Israel to 8,542. Taking into account the workers in other companies directly supported by Intel, which purchased about $5 billion of goods and services from other Israeli companies, the company supports, directly and indirectly, about 25,000 workers, said Eden.

All told, Intel invested $1.1 billion in Israel in 2012 without getting a shekel of incentive payments or grants from the government. Over the past decade, said Eden, Intel has invested $10.5 billion in Israel, receiving just $1.3 billion in grants.

There is a less positive side to consider. “Without Intel, total Israeli exports would have fallen by 10%, while tech exports would have declined 16%,” said Eden. That is perhaps too much responsibility for one company; more needs to be done on the business and government policy level to encourage more companies to be able to take on the role Intel currently fills.

“For example, we were responsible for one third of Israel’s total exports to China, the world’s hottest market that every country needs to be in,” said Eden. “This is bad news. More companies must focus on remaining competitive and growing their exports, to China and elsewhere.”

Israel may be the Start-Up Nation, as the book says, but “always is not forever,” Eden said. “If Israel cannot remain competitive with the new centers of excellence and start-up ecosystems in China, India, Brazil, and elsewhere, Israel will fall behind. We are harvesting today the fruits of investments made 20 and more years ago in education and innovation, as well as the benefits of major one-time events like the mass aliya of Soviet Jews to Israel, who came here with strong technology skills. That event will not be repeated.”

It is for this reason that Intel invests strongly in education, running dozens of programs in schools to inspire young people to work hard and learn the hard science skills needed to succeed in tech. “Many kids don’t want to work too hard, but often after we engage with them they open their eyes and become inspired to entertain careers in tech,” said Eden. “Ironically, it’s often the parents who encourage the kids not to work too hard, so we run programs involving kids and their parents, explaining to them the importance of technology to the future of their kids, and to the future of Israel.

“We are not looking to replace government when it comes to education,” Eden stressed. “Everything we do is in coordination with the Ministry of Education.” Intel is of course concerned with the future of Israeli tech education, he said. “Where will we get the engineers of tomorrow to replace the ones that will retire?”

Meanwhile, Intel is reaping the benefits of Israel’s still-considerable tech capabilities, in the form of dozens of new and improved products that keep the Intel sales machine well-oiled. Among the recent developments is a new system for far lower power consumption for 3rd-generation Ivy Bridge processor-equipped Ultrabook notebooks. The new notebooks consume a mere 7 watts of power per hour, instead of the more standard 13-15 watts. Once widely installed, the new innovation should allow a doubling of battery life in many Ultrabooks. This new power system was designed in Israel, said Roni Friedman, corporate VP and general manager of microprocessor and chipset development.

2012 was also a big year on the tablet front for Intel Israel, said Friedman. The Cloverview processors, at the heart of many tablets that run Windows 8, was developed in Israel, as were the chips that power many of Intel’s new line of smartphones. And going beyond the smartphone, said Eden, would be Intel’s next big thing — the Fablet, a combination of smartphone and tablet. Eden presented a working model of the Fablet, which Intel introduced at the Consumer Electronics Show in Las Vegas in January. “I expect the phones to become smarter and smarter, not phonier and phonier.” he quipped.

There was much more at the event — about how Intel’s Kiryat Gat chip fabrication plant is the best-performing one in Israel; how Intel Israel supports local start-ups, helping to match them with partners, large and small (and not necessarily Intel companies or partners); about advances in Intel’s perceptional computing project, which combines voice and gesture to make communicating with the computer easier (“In the coming years, voice will do to touch what touch did to the keyboard,” said Eden). And company officials discussed Intel Israel’s volunteerism programs, and how more than 4,000 employees — half the company’s Israel workforce — were involved in a range of volunteering activities in the community, investing more than 32,000 hours of their time.

If there was anything to take away from the discussion, said Eden, it’s that while Intel and Israel can be proud of each others’ resources and accomplishments, policy makers in Israel need to keep their eye on the ball when it comes to planning for tomorrow’s high-tech future.

“I love the book ‘Start-Up Nation,’ but it tells a story of the past,” said Eden. “The question is, will this book be the reality it is today in 20 years, or just a history book. If we act now to improve education and enhance motivation, and get government involved in encouraging both large corporations and start-ups to do business in Israel, then it will be the former. Let’s hope we don’t have to worry about the alternative.”

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