About 70% of Israeli technology companies reported damage to their operations due to the recall of a large part of their employees to military service (Shutterstock)

Operation "Al-Aqsa Flood" launched by the Palestinian resistance on October 7 dealt a severe blow to the Israeli technology sector, which is one of the most important economic sectors, employing 6,18 companies, industry accounting for 30% of GDP, about half of the country's exports, and <>% of tax revenues.

Israel is called the "country of startups", where the per capita share of tech startups exceeds any other country in the world, and it witnesses large investments in research and development from major American companies, including Microsoft, Apple, Google, Nvidia and others, and these companies are already feeling the effects of the aggression launched by the occupation on the Gaza Strip.

To illustrate the power of this sector in supporting the Israeli economy, it is enough to know that the technology industry has succeeded in sparing the Israeli economy the effects of the worst economic crises that have occurred in the world, including the Great Recession between 2008 and 2009.

Similarly, Israel has faced the coronavirus pandemic in a similar way: while almost all countries in the world have been affected by the pandemic, Israel has recovered more quickly thanks to the strength of its tech industry.

However, the situation is different now with the continued Israeli aggression on the Gaza Strip, as the technology sector has been severely affected, and more than 80% of Israeli advanced technology companies report that they have been affected by the war.

This vital sector has received painful blows that threaten its prosperity from several angles, the most important of which are:

Israel called up more than 300,<> reservists to take part in the war (French)


The most prominent immediate repercussions of the war on technology companies were in the workforce, as Israel mobilized more than 300,10 reserve soldiers to participate in the war, and the Israeli company "SNC" estimates that about 30% of technology employees were recruited, with the number rising to <>% in some companies, according to the platform "Forbes" in a report.

According to a report published by the Emerging Nation Policy Institute, 70% of Israeli technology companies reported damage to their operations due to the recall of a large part of their employees for military service.

Israel is one of the few countries outside East Asia where advanced chips are manufactured, including their development and planning, and the most prominent semiconductor company is Intel, which has been operating in Israel for nearly 50 years and employs about 12800,5 people in <> major locations in the country.

The NVIDIA development center, which makes chips for artificial intelligence systems, is located in the settlement of Yokneam, an hour's drive from the northern border with Lebanon, and Google has already opened its own chip development center in Israel, and Amazon employs more than 1500,<> people in the country.

According to an NVIDIA statement, about 12 percent of its 3300,<> employees have been called up to military service, the Israeli website Yedioth Ahronoth reported.

Cancellation or delay of investments

In 2021, Israeli startups raised $27 billion according to the Israel Innovation Authority (a government agency), and in light of the current war, the big challenge is the continued flow of investments in Israeli tech companies.

More than 40% of tech companies have investment agreements that have been delayed or cancelled, and only 10% have been able to hold meetings with investors.

John Medved, chief executive of Our Crowd, a major global venture investment platform based in Israel, told Reuters that "the big challenge for the startup economy is making sure the money keeps flowing, because the vast majority of these startups are not profitable and therefore need continued investment." "This is not a particularly easy time to get the investment."

To address these challenges, the Israel Innovation Authority, which is responsible for guiding the country's technology policies, announced the allocation of NIS 100 million ($26.7 million) in grants and aid to provide some 100 cash-strapped startups to meet the challenges posed by the Israeli war on Gaza.

Dror Benn, CEO of the Israel Innovation Authority, said: "The high-tech sector, which has faced a decline in investment over the past 18 months, is also affected by the current crisis. This impact is most evident in startups that need funding urgently, especially during a challenging period, where new funding rounds are difficult to conduct." According to the Times of Israel.

Before the war actually broke out, Israeli tech companies suffered a sharp drop in investment of up to 70 percent, exacerbated by the global economic slowdown and controversial judicial reform introduced by the Israeli government earlier this year.

Exports and tax revenues

The tech industry accounts for 30 percent of Israel's tax revenues, making its prosperity crucial to the Israeli economy. But in light of the aggression, the cessation or slowdown of the wheel of work has a significant impact on the exports of these companies, as well as the taxes they pay to the state treasury.

According to the Emerging Nation Policy Institute's report, a large percentage of companies are at risk of closure, delays in production and delivery of orders, or inability to meet investors and meet their requirements.

In a survey of 507 Israeli advanced technology companies, more than 70 percent of these companies reported delaying or canceling their important applications and projects.

These companies also confirmed their inability to conduct the laboratory experiments necessary to develop their projects, as well as difficulties in exporting and importing from abroad, and about two-thirds of these companies reported technical and operational problems related to the war situation.

All of this directly affects the tax revenues that the Tel Aviv treasury receives from the activity of this pivotal sector of the Israeli economy.

Source : Al Jazeera