Silicon Wadi (Hebrew: סיליקון ואדי, lit: "Silicon Valley") is an area with a high concentration of high-tech industries in the coastal plain in Israel, similar to Silicon Valley in California, in the United States. Silicon Wadi is considered second in importance only to its Californian counterpart. The area covers much of the country, although especially high concentrations of hi-tech industry can be found in the area around Tel Aviv including small clusters around the cities of Ra'anana, Herzliya, Caesarea, Haifa, the academic city of Rehovot and its neighbour Rishon Le Zion. More recently, clusters have been established around Jerusalem, with its two new science parks at Malha and Har Hotzvim, as well as towns such as Yokneam Illit in the North of the country and Israel's first "private city", Airport City, near Tel Aviv.
Origin of the term
Silicon Wadi is a pun based on the Californian region of Silicon Valley. Wadi is the Arabic word for a dry river bed.
Israeli hi-tech firms originally began to form in the 1960s. In 1961 ECI Telecom was founded, followed in 1962 by Tadiran and Elron Electronic Industries regarded by many to be the "Fairchild of Israel." The number internationally successful firms grew slowly, with only one or two new successful firms each year until the early 1990s. Motorola was the first US corporation to set up an R&D unit in Israel, in 1964. The center initially developed wireless products including remote irrigation systems and later developed leading chips such as the 68030. Following the 1967 French arms embargo, Israel was forced to develop a domestic military industry, focusing on developing a technological edge over its neighbors. Some of these military firms started to seek and develop civilian applications of military technology. In the 1970s more commercial innovations began, many of which were based on military R&D, including, Scitex digital printing systems which were based on fast rotation drums from fast-rotation electronic warfare systems.
World software market takes off
Slowly, the international computing industry shifted the emphasis from hardware (in which Israel had no comparative advantage) to software products (in which human capital plays a larger role). The country became one of the first nations to compete in global software markets. By the 1980s a diverse set of software firms had developed. Each found niches which were not dominated by US firms and between 1984 and 1991 "pure" software exports increased from $5 million to $110 million. Many of the important ideas here were developed by graduates of MMRM, the Israeli computer corps, established by the IDF in the 1960s.
Hi-tech firms continued to struggle throughout this period with marketing and many products, such as a mini-computer developed in the 1970s by Elbit, who were unable to successfully commercialise the product.
Takeoff in the 1990s
The 1990s saw the real takeoff of hi-tech industries in Israel, with international media attention increasing awareness of innovation in the country. Growth increased, whilst new immigrants from the Soviet Union increased the available hi-tech workforce. Peace agreements including the 1993 Oslo Peace Accord increased the investment environment and Silicon Wadi began to develop into a noticeable hi-tech cluster.
Silicon Wadi today
For more than 40 years local demand fueled Israeli industrial expansion, as the country's population grew rapidly and the standard of living rose. More recently, world demand for Israeli advanced technologies, software, electronics, and other sophisticated equipment has stimulated industrial growth. Israel's high status in new technologies is the result of its emphasis on higher education and research and development. Cultural factors contributing to the expansion includes chutzpah and openness to immigration. The government also assists industrial growth by providing low-rate loans from its development budget. The main limitations experienced by industry are the scarcity of domestic raw materials and sources of energy and the restricted size of the local market. One certain advantage is that many Israeli university graduates are likely to become IT entrepreneurs or join startups, about twice as much as US university graduates, who are also attracted to traditional corporate executive positions, according to Charles Holloway, co-director of the Center for Entrepreneurial Studies and a professor at the Stanford Graduate School of Business of Stanford University . ICQ, for instance, is one of the world's most famous Israeli software products, developed by 4 young entrepreneurs . IBM has its IBM Content Discovery Engineering Team in Jerusalem
Due to the small size of Israel, the concentration of hi-tech firms across much of the country is enough for it to be recognised as one large cluster. Most activity is located in the densely populated areas of metropolitan Tel Aviv, Haifa, andJerusalem although some secondary with additional activity include the corridor to Beer Sheba, including Kiryat Gat, and the Western Galilee. In all, this is an area no larger than 6000 square kilometers, half of the extended Silicon Valley’s geographical coverage.
Many international technology companies have research and development facilities in this region including the likes of Intel, IBM, Google, Hewlett-Packard, Philips, Cisco Systems, Oracle Corporation, SAP, BMC Software, Microsoft, Motorola and CA. Many Israeli high-tech companies are based in the region, including Zoran Corporation, CEVA Inc, Aladdin Knowledge Systems, NICE Systems, Horizon Semiconductors, RAD Data Communications, Radware, Tadiran Telecom, Radvision, Check Point Software Technologies, Amdocs, Babylon Ltd., Elbit, Israel Aircraft Industries and the solar thermal equipment designer and manufacturer Solel, with most of them being listed on the NASDAQ, which even has an Israel Index. Because of this, Israel is often referred to as the Silicon Wadi and is known to be second only to Silicon Valley in the level of its innovation and ingenuity. In fact, Newsweek Magazine recently named Tel Aviv as one of the world's top ten "Hot High-Tech Cities" . Intel developed its new dual-core Core Duo processor at its Israel Development Center located at the Merkaz Ta'asiya ve'Meida (Scientific Industries Center) in the city of Haifa. In 2006, more than 3,000 start-ups were created in Israel, a number that is only second to the US.
The importance of Silicon Wadi was first recognised internationally by Wired magazine, who in 2000, ranked locations by the strength of cluster effects, giving the Israeli high-tech cluster the same rank as Boston, Helsinki, London, and Kista in Sweden, second only to the Silicon Valley. In 2007, the Economist considered Silicon Wadi to be second in importance only to its Californian counterpart.
A startup that became a major powerhouse in the OpenSource era, Zend Technologies, is best known for its founders Andi Gutmans and Zeev Suraski, both Technion graduates and who, along with other Israeli graduates of the Technion and the Danish-Greenlandic Rasmus Lerdorf, have created PHP. Gutmans and Suraski are both Israelis and developed PHP3 and the core of PHP4; they founded Zend in Ramat Gan, Israel. Another entrepreneurial case is the RAD Group, whose member companies include RAD Data Communications and Radvision, which were founded by Zohar Zisapel and his brother Yehuda. Zohar is often called the "Bill Gates of Israel".
Israel Venture Capital Industry
The origins of the, now thriving, Venture Capital industry in Israel can be traced to a government initiative in 1993 named the Yozma program (“Initiative” in Hebrew); which offered attractive tax incentives to any foreign venture-capital investments in Israel and offered to double any investment with funds from the government.As a result;
"Between 1991 and 2000, Israel’s annual venture-capital outlays, nearly all private, rose nearly 60-fold, from $58 million to $3.3 billion; companies launched by Israeli venture funds rose from 100 to 800; and Israel’s information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. And it led the world in the share of its growth attributable to high-tech ventures: 70 percent."
City Journal - Summer 2009 
The 2009, Dun and Bradstreet venture capital ranking in Israel include:
|Notable Investments / Exists|
|Pitango||5516.7||AudioCodes, Radcom, Radware, Retalix, VocalTec|
|Star Ventures||3802||Alvarion, BigBand Networks, Ceragon Networks, Radcom, Vizrt|
|Evergreen||3345.8||Aladdin Knowledge Systems, Creo, Commtouch, Compugen, M-Systems, RADVision|
|Jerusalem Venture Partners||2984.6||Allot Communications, Fundtech, Jacada, Precise Software, XMPie|
|Gemini||2660||Ceragon Networks, Mellanox, nLayers, Traiana, Riverhead Networks|
|Vertex Venture Capital||2357.2||Actimize , SHL Telemedicine, Terayon Communication , Voltaire InfiniBand, PowerDsine|
|Carmel Ventures||2310.9||Actimize , Followap, ECI Telecom, Tecnomatix, Red Bend Software|
|Genesis Partners||2281.2||ClickSoftware Technologies, FilesX, ProSight, Security-7 , Tescom|
|Infinity Fund||2098.7||Shopping.com, Scitex Vision, Saifun Semiconductor, Identify Software, TeleMessage, Cyber-Ark Software, Teledata Networks|
|Giza Venture Capital||1900||Zoran Corporation, M-Systems, DSPC, Libit, Flash Networks, ActionBase|
- Israel’s Silicon Wadi: The forces behind cluster formation - By Catherine de Fontenay and Erran Carmel, June 2002
- Hi-Tech Opportunities in Israel - Israel Ministry of Foreign Affairs, May 2002
- Wireless Valley, Silicon Wadi and Digital Island – Helsinki, Tel Aviv and Dublin and the ICT global production network - By Stephen Roper and Seamus Grimes, March 2005. (Subsequently published in Geoforum)
- Alta Tecnologia nella Silicon Wadi Andrea Lawendel, LineaEDP (in italian)
- Israel's new economic challenge. Dominic Casciani, BBC News
- American University: Israel: ICT Geographics
- Wadiwallah - Silicon Valley's community portal
- ↑ Financial Times: Business as usual
- ↑ 2.0 2.1 "Land of milk and start-ups". The Economist. 2008-03-19. http://www.economist.com/business/displaystory.cfm?story_id=10881264. Retrieved 2008-03-22.
- ↑ 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 3.11 3.12 3.13 3.14 3.15 Israel’s Silicon Wadi: The forces behind cluster formation - By Catherine de Fontenay and Erran Carmel, June 2002
- ↑ Chutzpah of Israeli Startups, http://radoff.com/blog/2009/12/05/chutzpah-of-israeli-startups/
- ↑ Jewish News Weekly
- ↑ New Jersey Technology Council
- ↑ 7.0 7.1 IBM Research | IBM Haifa Labs
- ↑ Consulate General of Israel in Chicago - Israel's Economic and Business Climate. Letter from the Minister of Industry and Trade
- ↑ Israel Saves Intel
- ↑ Financial Times: Business as usual
- ↑ CNN Money article
- ↑ Innovations Publishing article
- ↑ 13.0 13.1 Gilder, George, "Silicon Israel - How market capitalism saved the Jewish state", City Journal -Summer 2009 19 (3), http://www.city-journal.org/2009/19_3_jewish-capitalism.html, retrieved 2009-11-11
- ↑ "Dun's 100 2009 - Venture Capital Funds", Dun & Bradstreet Israel Ltd., http://duns100.dundb.co.il/ts.cgi?tsscript=/2009e/e55a10, retrieved 2009-11-11