Vote of confidence in Israel’s brainpower

1. Intel has announced a $4.5BN-$5BN expansion of its southern Israel plant (in Kiryat Gat) – which is one of the world’s most advanced chip manufacturing facilities – for the next three years, following a 2016-2017 $6BN upgrade of the same facility. The two rounds of investment are, probably, related to Intel’s March, 2017 $15.3BN acquisition of Mobileye, the Jerusalem-based developer of advanced vision and autonomous-driving assistance systems. Intel acquired eight Israeli companies.

Intel employs, in Israel, 11,000 persons (in addition to Mobileye’s 1,000 employees) in three research & development centers and one manufacturing plant, which exported $3.7BN in 2017 (before the current expansion). Since 1974, when Intel launched its Israeli operations, it invested $35BN in Israel, and exported $50BN from Israel.Since 1998, “Intel Capital” has invested in 18 Israeli startups.

During the last decade, Intel’s total purchase of Israeli goods and services was $10BN (Globes Business Daily, February 19, 2018).

2. Israel has attracted over 300 global high tech companies due to its brain-power, which has been enhanced by a “do-or-die” state of mind – militarily, economically, educationally, agriculturally, irrigation-wise and balance of trade-wise, yielding game-changing, ground-breaking solutions and technologies.

3. Warren Buffett’s Berkshire Hathaway expressed confidence in Israel’s (ailing-recovering) Teva Pharmaceutical Industries, buying 1.8% of its stock for $358MN, which surged Teva’s share price 8.64% on the NYSE (Globes, Feb. 15).

4. According to Bloomberg (Feb. 19), a 10 year, $15BN deal to export Israeli natural gas to Egypt is about to be concluded between Noble Energy and Delek Drilling, the exporters, and Dolphinus Holdings, the importer, enhancing the Egypt-Israel cooperation, and advancing Egypt’s ambition to become a regional energy hub. It follows the 2016, 15 year $10BN natural gas agreement with Jordan.

5. The February 9 issue of the Economist Intelligence Unit reported that Israeli startup companies had a record year in 2017, raising $5.2BN, 9% more than 2016, compared with $1.8BN in 2012 and $3.6BN in 2013. Charles and David Koch (Industries) led a $150MN round of private placement in Israel’s Insightec (medical equipment), investing $100MN (Globes, Feb. 5). Israel’s Sol Gel dermatology (non-antibiotic treatment of acne) and UroGen raised $75MN and $60MN, respectively, on NASDAQ (Globes, Feb. 2). Israel’s Tyto Care held a round of private placement, totaling $21MN, led by China’s Ping An Global Voyager Fund (Globes, January 30).

6. According to the 2018 OECD ranking of the 10 most educated countries – as far as adults completing tertiary education in the form of a 2-year degree, 4-year-degree of vocational program – Israel is the 3^rd ranking country (49.9%), following Canada (56.27%) and Japan (50.50%), ahead of South Korea, Britain, the USA (45.67%), Australia, Finland, Norway and Luxembourg.7. Standard & Poor international credit rating agency has reaffirmed Israel’s A+ credit rating and economic outlook, highlighting Israel’s sustained reduction of its debt-to-gross domestic product ratio (60%) and the estimated 3.1% economic growth during 2018-2021 (Israel Hayom, February 4). According to the Feb. 5 issue of the Economist Intelligence Unit, Israel’s unemployment is 4.2%, a multi-decade low.

8. Israel’s $10BN Amdocs (25,000 employees, 85 countries) acquired the L.A.-based Vubiquity for $224MN (Globes, February 1). Israel’s geothermal and recovered energy power plants giant, Ormat, acquired the Idaho-based, renewable energy US Geothermal for $110MN (Globes, January 26).

Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1^st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4^th quarter of 2020 and double the volume of the 1^st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
Israel is ranked 12^th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
In 2020, Israel was ranked 20^th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
Israel’s foreign exchange reserves-to-GDP ratio of 41% (3^rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

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