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Japanese telecom giant NTT to open innovation lab in Israel

New lab will be ‘focal point’ of local activities of Fortune 100 company, an investor in Israeli startups since 2014

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

NTT President and CEO Jun Sawada (Shoko Takayasu Shoko Photography 2021)
NTT President and CEO Jun Sawada (Shoko Takayasu Shoko Photography 2021)

Japanese telecommunications giant NTT Corp said Wednesday it was setting up an innovation lab that will be “a focal point” for all of its activities in Israel.

The firm is one of the major players in Japanese communication market and is a ranked among the Fortune 100 companies, with over $100 billion in annual sales and more than 300,000 employees in more than 80 countries.

The NTT Innovation Laboratory Israel will be officially established in the next couple of months, the company said in a statement, and will work jointly with Israeli companies and academia “to develop cutting-edge technologies in various fields,” in a bid to support the activities of NTT and its customers.

The announcement comes amid an escalation of violence between Israel and the Hamas terror group in the Gaza Strip. For the past two days, Israel has been subject to massive barrages of rocket fire from Gaza, and has retaliated with airstrikes on terror targets within the Strip.

Illustrative image of the Japanese and Israeli flags (MikhailMishchenko; iStock by Getty Images)

NTT will also explore the integration of existing Israeli technologies into services and products developed by businesses within NTT Group, which span from telecommunications to finance and real estate. The company will also search for business collaborations and investment opportunities with Israeli companies, the statement said.

NTT is not new to Israel. Since 2014, its corporate venture capital arm NTT DoCoMo has invested in Israeli startups, including cybersecurity firm Riskified, personalized video marketing startup SundaySky, car data firm Otonomo; Vdoo Connected Trust, a maker of product security software; WSC Sports Technologies, a maker of automatic videos for sports events; and semiconductor firm Wiliot. The firm has also set up joint projects with Israeli companies in various technology fields, including cybersecurity and cloud services, the statement said.

Following NTT president and CEO Jun Sawada’s visit to Israel in February 2020, the group has boosted its activities in Israel. In March, NTT Finance announced the establishment of a $15 million fund, NTT Finance Israel L.P., set up with Israeli VC fund OurCrowd.

The new innovation lab will initially focus on cybersecurity, digital health and robotics. Besides working with the Israeli industry, the initial five-member team  will also promote cooperation with Israeli academia to pinpoint potential R&D projects, the statement said.

Sawada said that the Japanese firm sees technology as key to providing high value to businesses and societies, especially in light of the new challenges that have arisen from the COVID-19 pandemic. The company plans to increase investment in R&D activities globally this year, he said, to as much as JPY 500 billion, or some $5 billion.

“I believe that Israeli breakthroughs and cutting-edge technologies in various fields will support our customers and us to transform and confront these challenges so that NTT continues to lead… global innovation,” he said in the statement.

Warmer ties

NTT joins a number of Japanese companies that have established permanent offices in Israel in recent years as part of warmer economic ties between the nations.

For many years Japan avoided doing business with Israel out of Arab boycott concerns, but the relations have warmed since 2014, and the two countries’ prime ministers have traded visits.

The Japanese industry sees Israel as center for innovation and breakthrough technologies, and collaborations will help Japanese firms to stay competitive in a world that is becoming increasingly digital.

The volume of Japanese investments in Israel and acquisitions of Israeli firms has grown over the years and companies and government entities have set up collaboration projects.

2020 was a record year for economic relations between Japan and Israel, with Japanese firms investing some $1.1 billion in 51 deals in Israel, a 20% jump in money terms compared to 2019, according to a study by consulting firm Harel-Hertz Investment House.

Even so, Japan is still a small investor in Israel. US investors are the dominant players in the local market, capturing a massive 35% of capital raised by Israeli companies, according to a November 2018 report by IVC Research Center, which tracks the industry. Chinese, British, Japanese and German investors accounted for around 3% of investments each.

Noa Asher, who will head NTT’s new innovation lab, said that Israeli companies selected to collaborate with NTT Group companies will be able to operate through them not only in Japan but also in the other 80 markets in which they are active. The setting up of the lab in Israel “is a strong message to the Japanese industry on the importance of strengthening business ties with Israeli innovation.”

Headquartered in Tokyo, Japan, NTT is considered the one of the largest telecommunications companies in the world in terms of revenue.
NTT Group’s business consists of 982 subsidiaries in various fields including mobile communications, regional communications, long distance and international communications, and data communications as well as real estate, system development and finance.

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