A new San Francisco-based Bay Area Council Economic Institute report, “Silicon Valley to Silicon Wadi: California’s Economic Ties with Israel,” highlights the deep ties connecting the global innovation economies of California and Israel.

Based on extensive research and nearly 100 interviews, the report examines California’s economic footprint in Israel, Israel’s economic presence in California, key technologies where that activity is focused and future opportunities for collaboration.

Built on shared values and aligned interests, the relationship between California’s Silicon Valley and Israel’s Silicon Wadi is reflected in growing venture investment, large-scale acquisitions of Israeli companies, successful Israeli-founded unicorns and public companies in Silicon Valley and extensive corporate and binational R&D.

“Drawn by the search for engineering talent, Silicon Valley companies began their migration to Israel in the mid-1970s, a movement that has continued to the point where today California R&D centers are pervasive,” the report states. “Silicon Valley’s footprint can be seen most deeply in its concentrated investment in software and IT services.

More highlights of the report:

  • From January 2003 to February 2021, California companies made 147 foreign direct investment projects in Israel. Software and IT services was the leading field followed by semiconductors, financial services and communications.
  • 103 California companies invested a total of $22.4 billion in Israeli companies between 2003 and 2021.
  • California-based companies are responsible for 20 percent of all acquisitions of Israeli companies globally and for 42 percent of all acquisitions by U.S.-based companies.
  • Out of 402 multinational companies with an innovation presence in Israel, 96 are California headquartered, and 80 of those are from the Bay Area.
  • California hosts 140 Israeli-owned firms that support 6,248 jobs, amounting to $615 million in wages.
  • California is home to 22 Israeli-founded technology unicorns, the most of any U.S. state.
  • Three of the five largest Israeli acquisitions in history and seven of the top 15 acquisitions were made by California companies, including Mobileye and Moovit by Intel, Mellanox by NVIDIA and Waze by Google.

Silicon Valley-headquartered firms, such as Applied Materials, KLA Corporation, IBM, Oracle, Cisco, Salesforce and Intel, exemplify the role that Israel plays in the global R&D and business strategy of multinational companies.

“Intel, with 14,000 employees, is both Israel’s largest technology company and its largest private employer,” the report states.

Looking towards the future, the report pinpoints promising fields for future cooperation, among them biotech, data science and security, particularly advanced cryptographic systems, such as postquantum cryptography.

“Embedding intelligence at the edges of computing—through intelligent vehicles and highway systems, for example—is creating new security vulnerabilities. With more intelligence in the grid, there is a growing question of how to secure it, and with the world at an inflection point between data-enabled connectivity and systemic vulnerability, a rich opportunity exists for collaboration with Israel in fields such as AI and cybersecurity,” the report predicts.

This article first appeared in Israel21c.


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