Israel’s Tech Industry Hit Hardest by War

As recently as 2021, it was reported that Israel’s tech industry was booming, with one third of the world’s cybersecurity unicorns emerging from the country. Eric Schmidt, Google founder, also claimed that Israel is the best incubator in the world for tech entrepreneurs after the United States.  Although the industry accounts for only around 15% of Israel’s GDP, it also produces half of the state’s exports. It has been reiterated time and time again that the entire Israeli economy depends on its stability and growth. But it’s not just the economy that’s at stake here. The reputational value of Israel is also vulnerable to the condition of the tech industry.

The crisis now facing the industry because of the Israel/Palestine war is therefore significant in the eyes of foreign technology partners and investors. Right now, between 10 and 15% of the workforce has been brought back into the army. Up to 10% more are staying at home with their families. That’s a huge loss to workforce. But there’s more…

The Industry’s Vulnerable Big Guns

If I were an executive of Intel, I’d be worried about the enormous manufacturing plant a grenade’s throw from Gaza. Actually, I’d be worried if I were in the chip business anywhere – the volumes produced by this plant are staggering.

Nvidia have a plant for AI chips in Israel, in just as vulnerable a location.

Google are in a similar position. As are Amazon and Apple.

So, depleted workforces and locational vulnerability are the biggest threats posed to Israel’s tech industry. And then, as covered by Inside Telecom forty-eight hours ago, there is the looming threat of a Moody’s credit rating downgrade, which now seems inevitable given the probable lengthening of hostilities.  

The loss of life in wartime is one of humankind’s greatest blights. The loss of livelihoods, through economic devastation in the aftermath of war, is almost as damaging.

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