Israel is the single country with a semiconductor ecosystem in the Middle East. The industry in Israel is characterized by its multi-dimensional relations with Asian, American, and European companies. It reflects on joint projects, the acquisition of designing and manufacturing facilities, and start-up exports to foreign companies. These features develop based on the talent sector and free market rules. Similar elements also play a crucial role in the rise of India’s semiconductor sector. However, close ties of Israel with the United States and the European Union enable it to bring more advanced production in the country than that of neutral India.
Joint projects with foreign companies provide an inflow of know-how and industrial security. Tower Semiconductor, headquartered in Migdal Haemek, possesses manufacturing units in Newport Beach and San Antonio in the United States besides two facilities in Israel. These factories are specialized in producing CMOS, CIS, Power, Power Discrete, MEMS, and RF Analog. STMicroelectronics of Switzerland collaborates with Tower Semiconductor to manufacture 65nm Analog RF, Power, and Displays in Agrate capacity in Italy while Intel grants the Israeli company with foundry services in New Mexico. Moreover, TPSCo-Tower in cooperation with Nuvoton Technology Corporation Japan (NTCJ) produces Analog, Power Discrete, NVM, and CCD in Tonami and Analog, CMOS, CIS, and 45 nm RFCMOS/ SOI in Uozu. However, the Indian government blocked an 8 billion USD wafer fab proposal of Tower Semiconductor.
Tower Semiconductor through its subsidiary, Jazz Semiconductor, can participate in US government programs and the Newport Beach facility plays a key role in this partnership. In 2013, Jazz Semiconductor Trusted Foundry of Jazz Semiconductor was indexed by the US Department of Defense’s Defense Microelectronics Activity as a Category B1 Trusted Supplier. The Defense Microelectronics Activity program is responsible for “the integrity and confidentiality of integrated circuits during design and manufacturing while providing the US Government with access to advanced microelectronics technologies for both Trusted and non-sensitive applications.”
The acquisition of designing and manufacturing facilities to the country is another critical component of Israel’s semiconductor industry. As Tower Semiconductor leads partnership projects with foreign companies, Intel's role in bringing capacity to Israel is remarkable. Intel operates a 10nm manufacturing facility in Kiryat Gat, a hardware and software development center for processors and AI in Haifa, a communication and AI solutions development center in Petah Tikvah, and a communications, software, and cyber security development center in Jerusalem. In 2022, Intel exported operations in 8.7 billion USD, accounting for 5.5% of Israel’s high-tech exports and 1.75% of the country’s GDP.
Apart from Intel, Qualcomm (in Haifa, Hod Hasharon) Marvell (in Yokneam, Petah Tikva) Nvidia (in Tel Aviv), NXP (in Yokne'am Ilit), and Samsung (in Herzliya) possess R&D centers in Israel.
Start-up export is a way to bring know-how and technological development to Israel. Successful start-ups are partially or fully sold to a foreign company linking international and national businesses. In 2017, Intel acquired 97.3% shares of Mobileye, a producer of components for autonomous driving. Habana Labs, another company purchased by Intel, mainly specializes in data center training, artificial intelligence, and deep learning products. In addition to Intel, NVIDIA (Mellanox), Medtronic (Mazor Robotics), Google (Waze), and IBM (Trusteer) bought billion-dollar Israeli tech start-ups.
The Israeli semiconductor industry's success depends on the country's talent sector and free market. Technion – Israel Institute of Technology containing 4 campuses (Haifa, Tel Aviv, Cornell Tech, and Guangdong Technion Israel Institute of Technology) is considered the key factor contributing to training technology specialists. The Electrical and Computer Engineering faculty at the institute consists of 40 labs and 11 centers. Along with Technion, Tel Aviv University, Hebrew University of Jerusalem, and Ben Gurion University of Negev are also key engineer-training units in Israel whose graduates account for the most staff in semiconductor facilities.
In this manner, Israel resembles India where education at national universities is a critical factor in attracting the semiconductor industry to the country. In turn, both countries have geopolitical hurdles that make foreign companies hesitate to establish new facilities. Indian government is in a good-balanced position with both the West and Russia which keeps Western countries away from bringing strategic products to India. Meanwhile, Israel is located in geopolitically risky territory. The Houthi attacks in the Red Sea demonstrate how fragile the Israeli industrial supply chain is. In other words, the development rate of the industry in Israel is somehow parallel and proportional to the reliability of iron-dome-style systems. However, the Iron Dome is not tested against missiles produced in factory standards.
From the point of security, Israel's semiconductor sector could be divided into four categories. The first is foreign R&D and designing capacities that are mobile to evacuate in case of emergency. The second includes the facilities of Tower Semiconductor that are located in the safe zones overseas. The third is Intel’s high-tech facility in Kiryat Gat which belongs to an American company. The fourth is the national companies (Hailo, Valens Semiconductor, TriEye, Vayyar Imaging) that are both mobile and fragile to the crisis in Israel.
By sector, semiconductors for autonomous systems are the major area of the industry. Hailo, Valens Semiconductor, and TriEye produce components for autonomous vehicles. Mobileye is among the leaders of chip makers for self-driving cars. Mobileye produces EyeQ chipset packages for the autonomous car industry.
To wrap up, Israel has a globally multi-tied semiconductor industry based on national talent pool and market rules. However, the industry is located in geographically fragile zone although Tower Semiconductor’s capacities have been outsourced in secure zones in the United States, Japan and Italy.