Irrespective of Israel’s wars against Hamas and Hezbollah, and despite the dire predictions to the contrary of the Kaplan anti-government demonstators before war broke out, Intel, the semiconductor giant, confirmed a $25 billion investment in Israel, leveraging Israel’s brain power, which has enhanced Intel’s competitiveness in the global market.
Over the last 50 years, Intel has invested over $50 billion in Israel, establishing 4 research and development centers, despite the potential for wars and actual wars and terrorism. Intel will expand its Israeli chip factory, in order to diversify its manufacturing potential amid a chip arms race (New York Times, December 27, 2023).
Challenged by a unique environment – top heavy on terrorism and war, but low on natural resources and rainfall - Israel has bolstered its do-or-die state of mind, with defiance of odds, risk-taking, frontier, pioneering, optimism, patriotism, can-do and out-of-the-box mentality. This has yielded a robust flow of game-changing commercial, defense and dual-use technologies.
Israel entered the current wars with positive economic indicators, such as debt-to-GDP ratio in the low ‘60% (compared with 123% in the US) and an all-time high foreign exchange reserves of $200 billion.
Intel’s $25 billion investment in Israel is driven by the Israel’s unique competitive edge, as detailed in the following October 23, 2023 report by the St. Louis-based Stifel Investment Bank ($390BN asset management):
We believe that there are several key factors supporting the resilience of the Israeli market in the face of conflict, and the confidence of large multinational companies making large acquisitions in Israel, including during wars.
Some of those key factors include:
”We [Stifel Investment Bank] have analyzed the impact of 4 previous Israeli conflicts with a range of both duration and gravity including the 2014 Gaza War - Operation Protective Edge, the 2008 Gaza War - Operation Cast Lead, the 2006 Lebanon War, and the 2nd Intifada (2000).
“Our analysis examines the impact on the Tel Aviv Stock Exchange (TASE) as well as strategic transactional activity during and following the respective conflicts.
“The analysis reveals very strong resilience in the face of such Israeli market shocks, and with the exception of the 2nd Intifada (2000) - which was highly correlated to the dot-com bubble - the impact of historical conflicts on TASE have been minimal with the TASE experiencing single digit or negligible conflict related impacts, and an almost immediate rebound and strong short and long term performance post conflict….
”It is also noteworthy that throughout historical periods of conflict, there continued to be strategic M&A [Merger and Acquisition] activity with multinational strategic companies making material acquisitions in Israel during and immediately post conflict….”
According to Intel’s CEO, Patrick Gelsinger: “The Israeli people are the most resilient people on earth” (FOX Business, December 13, 2023).
Amb. (ret.) Yoram Ettinger is author of “Second Thought: a US-Israel Initiative” and will be available for speaking engagements in the US in February, May and September 2024. He can be reached at bit.ly/3HFNQb3