The business page of Israel's national daily, Ma'ariv, declares "Silicon Valley Wants You." Indeed, a wave of deals is sweeping the Israeli high-tech industry. In March alone, U.S. companies shelled out nearly $1.2 billion for Israeli software companies--compared with $1.5 billion for all of 1998. Predicts Shlomo Kalish, CEO of investment bank Jerusalem Global: "A large percentage of our high-tech companies will be bought out in the coming years."
The surge in high-tech sell-offs is creating a new class of local millionaires. Yet it's also sparking debate. Small and medium-sized Israeli companies are pondering how to survive in an era of rapid consolidation, especially in the software, communications, and computer industries. Many political leaders fear that Israel will turn into a research and development center for foreign companies, while production and jobs will move elsewhere. "It's a failure for the Israeli economy that companies with huge potential and proven track records lose their independence," says Orna Berry, chief scientist of the Trade & Industry Ministry, which invests $400 million in high-tech companies a year.