Israeli High Tech Is Not Just A Few Startups

Regarding "Violence may also leave scars on Israeli high tech" (The Middle East, Nov. 13): The bulk of Israel's high-tech sector (at least in terms of sales and industrial output) comes from established companies such as Scitex, ECI Telecom, Converse, Orbotech, Tadiran, and many others. These companies supply the lion's share of employment in Israel's high-tech industry--and stimulate the economy each time a product is manufactured and exported. Unlike most of the hot startups, they are well-entrenched and not dependent on what foreign investors view each night on TV.

If, as your writer claims, "instability could divert the recent influx of foreign capital," that might be a blessing in disguise for Israeli high tech. Because of the influx of more than $5 billion in venture capital since 1993, the focus of the industry has changed. From building world-class enterprises that sell worldwide, control their own means of distribution, and contribute to the local economy, it is shifting to startups that carry astronomically high price tags, sell or produce next to nothing, and operate as if they were one step away from being acquired by a U.S. high-tech giant.

As a result, Israeli high-tech companies have given up trying to grow, prosper, and build dynamic enterprises. Why bother investing in marketing if the goal is to have a Cisco Systems Inc. or Intel Corp. buy the company for access to its leading-edge technology?

A good slap in the face for Israel's booming startup industry may be just what the doctor ordered to get Israel's science-based industries back on track and have them start serving the needs of the country rather than lining the pockets of foreign investors.

Joel Bainerman

Zichron Yaacov, Israel

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