Israeli Information and Technology cluster Silicon Wadi

Israeli Information and Technology cluster, Silicon Wadi

Location Tel Aviv and its surroundings, Caesarea, Ra’anana (green) Rehovot, Rishon Le Zion (upper pink) Haifa (upper purple) recently also Yokneam Illit (west blue) and Jerusalem (yellow) Haifa, hosting Intel, IBM, Microsoft, Google, Yahoo!, Philips and other

History • 1949 – IBM – first MNE opens its office in Israel • 1960 s – numerous telecom companies set-up in Israel, among others Motorola in 1964. • 1967 – begining of military industry and military R&D • 1970 s – numerous R&D companies set-up on the groundings of military know-how • 1980 s till 1995 – software industry boom • 1998 till 2001 – dot-coms boom • 2000 - now – start-ups boom

Why R&D and technology? • Costs of a four-week conflict in gaza strip = $2. 5 billion to $3. 6 billion • Production of 10 barrels of crude oil a day (2009) – 0, 2% of how much USA produces daily War expenses Lack of natural resources Small area • Wood and metals are scarce • Total area – 20 770 m 2. Need of efficient way of earning funds

Governments’ contribution In order to stimulate R&D industry, over the years Israeli governments initiated various programs and actions: • Low rate loans from development budget for start-ups • Tax reduction for R&D companies • 50% funding contributions for most prosperous start-ups from OCS • Development of universities towards R&D industry learning

Results • By 2013 Israel ranked 19 th on the UN’s Human Development Index (Very Highly Developed). • Highest number of scientists, technicians and engineers per capita in the world – 140 per 10 000 citizens (U. S. – 85, Japan – 83). • 3000 technology companies of which more than 500 have yearly revenues over $20 million. • 120 Israeli companies listed on Nasdaq • 200 start-ups created every year, over 2500 operating.

Results – prominent investors Over the years, Israeli Silicon Wadi’s sucess can be measured by numerous MNE which decided to open their R&D centres there: 2000 employees 9200 employees 450 employees 6000 employees 350 employees 400 employees 1500 employees 900 employees And others, including 3 M, AMD, AT&T, Barclays, Broadcom, Citigroup, Dell, General Electric, General Motors, Huawei, John Deere, Johnson&Johnson, Motorola, LG, Mc. Afee, Oracle, Nestle, Paypal, Philips, Samsung, Siemens, Qualcomm, AOL, Alcatel-Lucent, Xerox….

Taiwan, Hsinchu Science and Industrial Park

Location • The HSP is approximately 15 minutes away from the Hsinchu City center • 50 minutes from Taiwan Taoyuan International Airport by car. • It takes 90 minutes to Keelung Harbor to the north and Taichung Harbor to the south • North-South Railway offers another transport alternative. The complete transport infrastructure greatly facilitates the transportation of goods and personnel.

History • Creation of ITRI (Industrial Technology Research Institute) in 1973, built with the help of american specialists to develop industrial modernization of Taiwan • HSP - Taiwan's first science park - was established on December 15, 1980 with IT specialization • 1990 , number of companies reached 121 with over 22, 356 employees. • 1994 , new strategic directions for the park R&D, start of “semiconductors” development. • 2000, 28$ billion turnover • 2003, 101, 763 employees in 369 firms.

Why was HSP needed? • Built by the govenment to combat brain drain, the Hsinchu Science Park (nicknamed Taiwan’s “Silicon Valley”) has emerged as the major base of high-tech development in Taiwan and was the first government planned industrial park focused on IT. • The Hsinchu Science Park was created to mitigate the brain drain associated with the exodus of recent graduates of Taiwanese universities. Before the project, as many as 80% of Taiwanese students who studied abroad did not return after graduation.

Solutions • Kwoh-Ting Li, former Finance Minister • The government devised a number of policies to attract firms into the Park. of Chinese Taipei, founded Hsinchu These included a five-year tax Science and Industrial Park. Inspired holiday; a maximum income tax rate by Silicon Valley in the United States, of 22%; duty-free imports of he convinced expats to build machinery, equipment, raw material companies in Taiwan just as had been and semi-finished products; and done in Silicon Valley. He introduced capitalization of investors’ patents the concept of venture capital to the and know-how as equity shares. The country in an effort to attract funds government also directly entered to finance these start-ups. into industrial production, establishing joint venture companies with private capital. The solution was underpinned by building bridges among R&D institutes, academic institutions and park clients (the companies). Thus making an advanced tech hive

Results • More than 70% of global IT • Although most of the returning industry products are initiated migrants were not the group of from companies at the Hsinchu recent graduates that had left, Science Park. many nationals with 10 to 15 years of work experience outside of Taiwan returned. • For the last five years, the Hsinchu Science Park (HSP) has generated annual revenue of US$ 40 billion. • Many high-tech products created in the Park rank first in world production and have won at awards at international competitions. • The average R&D investment inside the HSP is three times that of all Taiwan manufacturing companies. • Companies in the HSP generate one-tenth of the revenue of Taiwan’s entire manufacturing sector.