Israeli chip firms help sector’s rise in China

By Zhang Hongpei Source:Global Times Published: 2019/4/25 20:23:40

Cooperation not affected by US protectionism

A view of the Israel Pavilion at the first China International Import Expo in November 2018 Photo: IC

China will remain a promising market for Israeli chipset makers for the foreseeable future, and the world-leading advantage of Israel in high technology and innovation will help promote China's development in the sector via cooperation, entrepreneurs and investors told the Global Times.

"Chinese demand for chipsets keeps growing and it is also going after high-quality chips with better performance," said Amir Gal-Or, chairman of the Israeli-Chinese investment firm Infinity Group.

"The prospects for the industry in China are excellent, given the need and the ecosystem focused on it," Gal-Or told the Global Times in a recent interview.

Data showed semiconductor exports from Israel to China jumped 80 percent in 2018 to $2.6 billion, and at least 80 percent of those sales came from Intel's Kiryat Gat plant in Israel, according to a Reuters report in March.

Sales to China of inspection equipment for chip manufacturing jumped 64 percent to $450 million in 2018, said the report, citing Israel's export institute. The equipment is used in the process of chipset manufacturing, which is expected to be strengthened as Chinese authorities want to shake off the nation's excessive reliance on chipset imports, especially after the ZTE chip ban by the US last year. 

Benjamin Peng, managing director and head of China of Cukierman & Co. Investment House, an investment banking firm, told the Global Times in a recent interview that Israel has become known for its world-leading chipset research and development (R&D). During the past four decades, it has built up a huge talent pool.

"Big technology companies like Qualcomm, Apple and Huawei have all conducted chipset R&D in Israel, where some of the latest technology is born," said Peng.

Israel is a world-renowned innovative nation with more than 6,000 high-technology start-ups and more than 350 R&D centers funded by multinational companies, according to the Xinhua News Agency.

He suggested that Chinese companies' investment in Israel could take the acquisition approach instead of setting up R&D centers there. "Israeli companies are generally small-scale and the acquisition cost is not high. They can become long-term R&D bases for Chinese companies after acquisition," he noted.

"Once China shores up it R&D ability in Israel, it can greatly help the country's domestic chipset industry and end over-reliance on technology from the US, Japan and South Korea," Peng added.

China's imports of semiconductors have risen significantly during recent years thanks to increasing domestic demand, with the value exceeding $300 billion for the first time in 2018.

China's self-sufficiency rate of semiconductors is expected to increase from 11.2 percent to 15 percent from 2017 to 2020, according to industry information website 

"Few Israeli technology companies have set up subsidiaries in China due to limited marketing capability. On the other hand, they are eagerly pursuing investment from China so as to help open the local market for them," Peng said. Both capital and strategic partners are needed for these Israeli chipset makers, he added.

Eli Assoolin, CEO and co-founder of Israel start-up Newsight Imaging, told the Global Times recently that the company "has sold hundreds of thousands of chips to Chinese companies, and the future looks very promising for us."

"China is currently and in the foreseeable future, our main market," Assoolin said.

Newsight Imaging trades with Chinese lidar makers, sensor makers and barcode-reader developers.

Both Cukierman & Co Investment House and Newsight Imaging are members of the Israel Chamber of Commerce.

"China is considered a superpower that has many impressive achievements in most of the science areas. Chips play a major role in today's technology development, and I think China will become a leader in the chip industry too," said Assoolin, adding that Israel could be an ideal partner for achieving this goal.

Semiconductors related to artificial intelligence, autonomous vehicles and drones could be highlights for Israeli chip producers, according to Peng.

Due to trade disputes between China and the US, Chinese companies are continuously seeking footholds in next-generation technology and Israel is turning out to be an ideal partner.

"There is no need for us to 'take sides' in the trade war, as long as our Israeli government encourages business with China. As it is today, we are happy to trade with China and with the US and provide our disruptive solutions for 3D and spectral vision," Assoolin said.

According to Gal-Or, Israel is more open and less regulated when it come to the semiconductor industry compared with the US, which bodes well for cooperation with Chinese businesses.

Newspaper headline: Israeli chip firms help sector’s rise


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