Presented byEran Davidson

President and CEOHasso Plattner Ventures

The High-Tech Industry

And The Israeli Economy 2005

Israel – General Background

• Area: 20,770 sq km (the world’s 100th smallest country)

• Population – 6.8 million (% 0.01 of the world!)

• Gross Domestic Product (GDP)

$120 billion ($17,500 per capita – exceeding that of UK)

• GDP Growth Rate: 5.1%• Exports : $51.5 billion• Imports : $52 billion

ISRAELI GEOGRAPHYIsrael and the Mediterranean

Criteria2002200320042005

GDP (current prices in B$)104.2110.4117.6124

GDP Real Growth Rate (%)-0.7%1.3%4.3%5.1%

GDP per Capita (current prices, M$)15.916.517.317.9

GDP per Capita Growth Rate (%)-2.7%-0.5%2.5%3.2%

Exports of Goods & Services (B$)37.038.450.456.7

Imports of Goods & Services (B$)45.644.357.757

Unemployment Rate (%)10.3%10.7%10.4%9.1%

Inflation Rate ( CPI, end of year)6.5%-1.9%1.2%2.8%

Main Economic Indicators

Facts & Figures

And this is achieved in a country with the highest expenditure on defense and security issues (in

absolute numbers per capita), and not natural resources beside brain

power

Israel’s Economic Characteristics

Economic Stability

Constant Growth

Political Stability

Fast Development of Technology & Hi-Tech Industries

Human Capital

Israel’s Economy – Main Characteristics

Export Oriented Industry

• Entrepreneurial Culture

• Supportive Environment for Business

• Investment & R&D Incentives

About Palm Trees

Some interesting facts about Israel

• The Middle East has been growing date palms for centuries. The average tree is about 20 feet tall and yields about 38 pounds of dates per year

• Israel date trees are yielding 400 pounds per year and are short enough to be harvested from the ground

High tech samples from Israel

• The Cell Phone was developed in Israel by Israelis working in Motorola, which has its largest development center in Israel

• Microsoft, Intel and Cisco built their only R&D facilities outside the US in Israel

• SAP built their only R&D facilities outside the US and Germany in Israel, with 700 scientists

• The Pentium Chip in your PC was most likely produced in Israel

Israeli high tech innovations

• Voice mail technology was developed in Israel (Comverse)

• Instant Messaging technology was developed in Israel (“ICQ”, now AOL)

• Most of Windows NT and XP was developed in Israel by Microsoft Israel

• The Pentium MMX, Pentium 4 and Centrino Processors were developed in Israel

Medical developments

• Israel “Given Imaging” developed the first ingestible Video Camera, so small it fits inside a pill. Used to view the small intestine from inside, to diagnose and monitor cancer and digestive disorders.

• Israeli scientists developed the first fully computerized, no-radiation, diagnostic instrumentation to breast cancer

• A new acne treatment was developed in Israel – the Clear Light device produces a high-density, EV-light free, narrow band that causes acne bacteria to self destruct, without damaging surrounding skin

Alternative Energy, environment…

• An Israeli company was the first to develop and install a large scale solar powered and fully functional electricity generating plant, in Southern California Mojave desert.

• Israel is the only country in the world that entered the 21st century with a net gain in its number of trees, made more remarkable when considering it was achieved in an area regarded mainly desert

The Human Factor

• In absolute terms Israel has the largest number of startup companies worldwide (second after the US) – well over 3,000.

• Israel produces more scientific papers per capita than any other nation by a large margin – 109 per 10,000 people

• Israelis file more patents per capita than any other nation worldwide

• Israel has the highest ratio of University degrees to the population in the world

Jaffa Oranges vs Hi-Tech

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ISRAEL ELECTRONICS & INFORMATION INDUSTRIESSALES & EXPORT (M$)

ISRAEL ELECTRONICS & INFORMATION INDUSTRIESSALES & EXPORT (M$)

DOMESTIC

EXPORT

Start-ups – The emerging economy force

Israel is one of the largest world centers for start-up enterprise, with +3,000 start-ups.

Innovative

Technology-intensive

Representing technology breakthrough

Start-Ups – The Emerging Economic Force

Industry

Israel Enjoys

the Highest Concentration

of High-Tech Companies

Outside of the Silicon Valley“

”Robert Greifeld President & CEO NASDAQ 2004

The Driving ForcesIsrael’s unique advantage

Government commitment for industrial growth, R&D

Highly skilled workforce

High concentration of VCs and capital markets

Transition from Military to Civilian Markets

I.D.F. – Entrepreneurial Spirit

Israel has the highest ratio of University degrees to the population in the world

Israel has the highest percentage in the world in PC’s per capita

40% of the recent immigrant opulation hold academic degree

Educational Levels

Source: The Global Competitiveness Report 2004-2005

Core Technology-Innovating Economies, 2003 Israel Ranks 4 Out of 103 Countries

Singapore

Canada

Germany

Finland

Sweden

Switzerland

Israel

Taiwan

Japan

USA

Facts & Figures

1

2

3

4

5

6

7

8

9

10

Doing Business In Israel

Recent M&A

Israeli Company

TechnologyAcquirerSumTime

Terayon Communication

Systems Inc. CommunicationsAris $345M 09/2005

Scitex Vision Ltd .PrintingHP $230M 08/2005

Sheer Networks Ltd CommunicationsCisco $122M 07/2005

Siliquent Technologies Inc. CommunicationsBroadcom $84M 07/2005

Medimop Medical Projects

Ltd. Life Sciences

West Pharmaceutical

Services Inc. $42M 07/2005

Medcon Telemedicine

Technology Ltd. Life Sciences

McKesson Corp. Life

Sciences $105M 06/2005

Shopping.com InterneteBay$620M 06/2005

Doing Business In Israel

Recent M&A (cont.)

Israeli Company

TechnologyAcquirerSumTime

Impulse DynamicsHealthcare

Johnson & Johnson 80M$05/2005

SiliquentSemiconductors

FablessBroadcom~85M$05/2005

TecnomatixSoftwareUGS Corp228M$04/2005

KagoorVoiceover InternetJuniper

Networks68M$03/2005

SavientBiopharmaceuticalFerring

Holding SA80M$03/2005

OREX Radiography

Medical Equipment

Kodak51M$03/2005

Native NetworksCommunicationAlcatel~50M$03/2005

Oplus Technologies

Processors for Digital Display

DevicesIntel100M$03/2005

Modem-ArtSemiconductors

FablessAgere Systems150M$02/2005

American Companies Invested in Israel

• Microsoft• Pratt & Whitney• AOL time Warner• Intel• IBM• Boeing Enterprises• Cisco Systems

• GE• Lucent• 3Com• Hewlett Packard• Merrill Lynch• Motorola• Sun Microsystems

European Companies Invested in Israel

• Siemens• DaimlerChrysler• Volvo• Cable & Wireless• Baan• Volkswagen

• Deutsche Telekom• L’Oreal• British Telecom• Danone• Ares Sereno• Unilever

Asian Companies Invested in Israel

• Samsung Electronics• Daewoo• Nomura• Hutchison Telecomm.• Nissho Iwai• LG Group• New Margine (VC)

• Sony• Toyo Ink• Hyundai• Acer Computers• Sumitomo Trading• Fuji• Honda

Technology LeadershipTechnology Leadership

“Israel has a spectacular people, great energy, unique intelligence–

an ability to solve problems”Christopher Galvin, CEO ,Motorola

THE ADVANTAGES OF DOING BUSINESS IN ISRAELTHE ADVANTAGES OF DOING BUSINESS IN ISRAEL

Doing Business In Israel

Technology Leadership

Thanks to quality education,

Israel is one of the most

advanced countries in the world.

… Israel is advancing in high-tech

even more than

other developed countries Bill Gates, CEO Microsoft, World Economic Forum, Davos, January 2000

”

“

Doing Business In Israel

Technology Leadership (cont.)

“Israel’s market is relatively large

and sophisticated, it boasts the world’s

greatest per capita number of engineers ,

scientists and doctors .

The Israeli economy is simply a reflection

of the country’s greatest natural resource -

which is the brainpower and ingenuity

of its citizens Mike Zafirovski ,COO,Motorola 2003 ”

• Outstanding Human Resources

• Global Economic Orientation

• Stability

• Modern Hi-Tech Infrastructure

• Supportive Environment

Conclusion

Eran Davidson