Hamas attacks disrupt business as usual
The tech industry in Israel, which accounts for 14% of jobs and almost a fifth of gross domestic product, is facing unprecedented challenges as the country reels from a wave of violence unleashed by the Palestinian militant group Hamas. Hundreds of Israelis have been killed and abducted by Hamas gunmen who rampaged through Israeli towns on Saturday, while thousands of rockets have been fired into Israel from Gaza, some reaching as far as Tel Aviv. Israel has retaliated with air strikes on Hamas targets in Gaza, killing hundreds of people.
The attacks have disrupted business as usual for many tech companies, who have had to close offices, cancel events, and deal with staff being called up as military reservists. Some airlines have also suspended flights to and from Israel, making it harder for tech executives and investors to travel. The situation has created uncertainty and anxiety for the tech sector, which has been a key driver of economic growth and innovation in Israel for decades.
Tech companies fortify security and support workers
Tech companies operating in Israel are expected to fortify security as they could face disruptions, said investors and analysts. Some technology spending is tied to the military, which means that some tech installations could be targeted by Hamas or other hostile actors. Tech companies are also taking steps to safeguard and support their workers, who may be affected by the violence or called up for military service.
A spokesperson for Intel Corp, Israel’s largest private employer and exporter, said on Sunday the company was “closely monitoring the situation in Israel and taking steps to safeguard and support our workers.” The spokesperson declined to say whether chip production has been affected by the situation. Nvidia, the world’s largest maker of chips used for artificial intelligence and computer graphics, said it had canceled an AI summit scheduled for Tel Aviv next week, where its CEO Jensen Huang was due to speak. Israel-based Tower Semiconductor, which provides customers with analog and mixed-signal semiconductors, mainly for the automotive and consumer industries, said it was operating as usual.
Other tech giants, such as Meta Platforms, Alphabet and Apple did not respond to requests for comment. Microsoft declined to comment.
Tech sector faces slowdown and uncertainty
The tech sector in Israel had already been facing a slowdown in 2023, exacerbated by internal political conflict and protests. The latest violence could further dampen the prospects of the industry, which relies on global markets and talent. The tech sector could also face regulatory challenges, as some countries may impose sanctions or restrictions on trade with Israel in response to its actions in Gaza.
“It is a huge disruption to business as usual,” said Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors. He said in the short-term resources could be diverted if the conflict expands, such as staff at tech companies being called up as military reservists. Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina, said there will likely be a “tremendous effort” to guard physical installations for companies based in Israel from attacks because some technology spending is tied to the military.
However, some analysts and investors remain optimistic about the long-term potential of the tech sector in Israel, which has shown resilience and innovation in the past. Israel has produced many successful tech startups and unicorns, such as Wix, Fiverr, Payoneer, Monday.com and Lemonade. The country also attracts significant foreign investment and collaboration from global tech giants, such as Intel, Google, Microsoft and Amazon.
“Israel’s tech sector is one of the most dynamic and innovative in the world,” said Jonathan Medved, founder and CEO of OurCrowd, a Jerusalem-based venture capital platform. “We have seen how Israeli tech companies have thrived even during times of crisis and conflict. We believe that Israeli tech will continue to grow and create value for investors and society.”
