Where is the Silicon Wadi?
by IASPS Staff
Just
recently, one of the world’s leading business consulting firms contacted
IASPS through this web site to ask us to help them accumulate “cluster
data” on the Silicon Wadi. When
asked what they meant by this request, their researcher responded that she
wanted specific data on the economics of Silicon Wadi relative to the rest
of the high-tech production in Israel.
Now
if you don’t immediately see the problem with this request, then you too
have fallen prey to the Israeli spinmasters and propaganda machines.
In a word, there is no Silicon Wadi.
If that is a surprise to you, then read on.
Any
one who understands that there is a neighborhood or street or village named
Silicon Wadi in Israel is laboring under a misconception.
Unlike the Silicon Valley in Northern California and the Silicon
Alley in New York City, there is NO place called the Silicon Wadi in Israel.
The news media and the Israeli spinmasters have coined the phrase
Silicon Wadi to represent the entire private high-tech sector in Israel.
Private high-tech businesses are focused in five or six very small
clusters: Har Hotzfim and Malkah Technology Park in Jerusalem, the Rechovot/Rishon
LeZion area (which includes the famous Weizmann Institute), Haifa Technology
Park, Herztiliyah Pituach area, and Rosh HaAyin.
(There are indeed other “clusters” in Israel but they are better
termed micro-clusters.)
Several
points need to be made clear (and any one can glean this information from
the IASPS site by simply searching for "hi-tech" or
"technology"). Ninety
percent of the high-tech in Israel are start up and early stage ventures.
Once the typical Israeli start up generates real venture capital money, it
immediately sets up administration and business development abroad,
typically in the U.S. (The fact
that 90% of Israeli startups register as Delaware corporations has vexed the
tax authorities here for years.) Very
little is left behind in Israel except a relatively small R&D facility
(there are rare exceptions, like Checkpoint).
Israel has become a bedroom community for Israeli hi-tech
entrepreneurs. Invariably this
helps the local economy but only marginally, at least in terms of numbers.
The
Israeli economy consists of two workforces: the old low value added economy
(agriculture, light manufacturing, chemicals, textiles, diamonds, tourism,
construction) - this one large and dominant, and the high-value added
software and telecom hardware development economy (dot coms, networking
hardware, optical/laser technology, and to a lesser extent bio-med) - this
one smaller but growing in importance due to the billion dollar headlines.
For example, Israel's hi-tech workforce is already at 100%
employment. It just isn't big
enough to fill the needs of all the startups dreaming of the billion dollar
valuation. Israel is in the
midst of a debate about "importing" hi-tech workers from India.
The demand for these workers is almost exclusively from software and
dot com start ups.
Predictions
on the future of Israel's hi-tech industry can be made: If the market for
dot com IPOs or the availability of VC money remains soft for an extended
period of time, Israelis trained in hi-tech will migrate to the States where
they can find work in established companies.
There are very few established companies doing hi-tech development
work here. Intel for example
employs hundreds of lo- to med-tech workers to assemble chips. That is
hardly "silicon valley" stuff.
The
bottom line is that if one seeks authoritative data on the Silicon Wadi,
there is little to do but look at Israel's country-wide hi-tech industry, but
even that is only part of the story. For
the complete picture, one might seek some critical analysis of that data.
For a start, begin here.
http://www.iasps.org/opeds/oped4.htm
http://www.iasps.org/opeds/oped3.htm
http://www.iasps.org/opeds/oped1.htm
http://www.iasps.org/policystudies/ps42.pdf
http://www.iasps.org/quarterly/spring00/rabushka.htm
http://www.iasps.org/nbn/nbn83.htm
http://www.iasps.org/nbn/nbn86.htm
