Israeli engineers will bounce back from Freescale lab closure, says expert

One of the granddaddies of Israeli tech is no more — but the 200 or so workers who are to lose their job with the closure of NXP Israel’s Herzliya R&D center should land on their feet, believes Shlomo Gradman, CEO of ASG Ltd., and chairman of the Israeli High Tech CEO Forum.

“The chip business is still very important in Israel, and I know that several multinationals are looking to hire engineers. It may take some time, but I believe the engineers losing their jobs will find another one, sooner rather than later.”

NXP is actually a new name on the Israeli tech scene; it’s the company that bought out Freescale, which, since 1982 — when it was established as a spinoff of Motorola Semiconductor — has had a presence in Israel.

Until just a few years ago, the company had almost 500 engineers working on communication and networking technology; layoffs slowly ate into that level of staffing. And today, upon the completion of the acquisition of Freescale and its 15,000-plus employees, just 200 remained at Freescale Israel’s R&D center.

Now, even that lessened presence is to be eliminated, company sources told Israeli tech reporters Sunday. NXP, one of the world’s largest semiconductor companies, never had an R&D lab in Israel. “They have locations all over the world, and are likely to replace the Israeli engineers with engineers from China and India.” Indeed, all seven of NXP’s test and assembly sites, as well as two of their five wafer fabrication plants, are located in the Far East.

The closure of the NXP/Freescale operation in Israel truly marks the end of an era. Herzliya was once one of Freescale’s most important development centers, and chips and micro controllers designed by the company (and in Israel) can be found in literally millions of products from the world’s biggest communication companies, in use in equipment used by cell phone service providers, ISPs, cloud computing centers, and many other communication providers.

But if NXP has decided that its needs do not match the innovation the Herzliya team has proven capable of, there are plenty of other firms that could use some good engineers. Gradman is one of the most “connected” people in the Israeli semiconductor industry. A veteran of the international conference circuit, he personally organizes numerous major events in Israel each year, including the Chipex event, where the semiconductor industry shows off its latest and greatest; and the upcoming (in February) Innovex, an international showcase that presents the latest in Israeli technology, and is attended by top tech executives from some of the biggest companies in the US, Europe, and the Far East.

As such, he is as much in the know about what is happening in the tech business as anyone, and “I know that some of the multinationals have open positions and are very interested in hiring good engineers here.” Many of them, in fact, have R&D centers right down the block from NXP/Freescale, so “it’s possible that many of these engineers will end up in the same neighborhood that they are used to working in.”

The closure of the R&D center does not reflect in any way on the greater Israeli high-tech industry, or the semiconductor business specifically; both are very healthy, and the latter particularly so.

“I know the perception has been that semiconductors were long ago eclipsed by other areas, like mobile and networking technology, and that there was no way we could compete with China and India because of the economies of scale advantage they have over us, but semiconductors have always been there, below the surface,” said Gradman. Just ask Apple; “they acquired Anobit and PrimeSense, two companies whose main activity was chip design, and hired hundreds of chip designers who were let go from other companies, like Texas Instruments.”

The Internet of Things, added Gradman, is a major semiconductor play, as companies race to make smaller and better connected chips to control the almost-endless list of devices that are going to be connected, uploading data to the cloud for analysis. The IoT is a major game-changer that could become “a major growth engine,” Gradman said.

And the engineers now on the market are just the people to help the Intels, Microsofts, Apples and Samsungs of the world build better IoT devices. “These engineers bring extensive experience and skills with them,” said Gradman. “Two hundreds engineers is a lot for the market to absorb at one time, but I am sure things will work out for them.”