It’s already the beginning of April and that means the completion of Q1 and the first fiscal quarter last month. How time has flown by; we were just thinking about how good we’ve been with our New Year's resolutions. Now we’re looking to the weeks ahead as spring is here, and soon (rather than later in Israel) summer will arrive. Typical to the business environment in Israel things moved fast, and change was the only constant. Technology as usual played a major part in current business events over the past few months, but as we’ll explore below political decisions in corridors of power outside the country impacted the business environment. 2019 is already shaping up to be an exciting year and the Clearview Partners team is going to recap a few major trends and events we’ve witnessed this past quarter.
Major acquisitions are still happening
The acquisition of Mellanox by chipmaker Nvidia has been months (if not years) in the making but news of this major acquisition was only released in the past few weeks. As this Techcrunch article states regarding reasons for the acquisition it was “an ongoing consolidation of chipmakers — and in this case those making chips for supercomputers, a crucial market segment in this age of cloud services”. Bidding wars cause the acquisition price to rise, and in this case, it was no different as both Intel and Microsoft were interested in acquiring Mellanox. Depends on whose analysis on the state of the Israeli ecosystem you read but it looks like the global desire for Israeli technology is not slowing.
Israel could make a serious U-turn from China
While Chinese investment in Israel is nothing new, it looks like the government and security establishment in Israel are taking this more seriously. The business community in Israel might have previously taken Chinese capital with open arms; trade relations between China and Israel have grown to over 13 billion in the last decade. The concern however of Chinese spying has become too great of a threat to ignore; as this Foreign Policy article states that “investigations by Israeli counterintelligence agencies discovered that Chinese hackers were particularly interested in the Israeli companies’ ties with U.S. defense contractors”. The Chinese were looking for a back door to spy on the United States. In Israel where defense needs prioritize business the direct involvement of the Israeli government would significantly impact trade relations.
Social media engineering around the upcoming election is coming to a head
While Washington is awash in the findings around the Mueller report Israel is preparing for what could be a monumental election. Politics always impact the economy but, in this case, it could be the opposite, with the big tech companies impacting the elections. Thankfully Twitter is not a popular platform in Israel, but Facebook (and Facebook owned) Instagram and WhatsApp are the social media platforms of choice. Not since the advent of television has new technology (in this case social media) so fundamentally impacted the democratic election process. While officially Facebook has pledged to crack down on fake news in the run up to the election, they will need to step up their online policing: Netanyahu Data Collection Chatbot Irks Facebook.
More direct airline routes are being added
Tel Aviv has become the go-to business destination, and aside from familiar locations such as American cities, additional lines are being added in places such as Turkey. The notable lines are the direct lines from Chicago O’Hare and direct lines to Indian cities Goa and Kochi. Regarding other Western Hemisphere destinations São Paulo recently added a flight connecting Tel Aviv with Latin America and Washington will be added later this spring. Popular tourist destinations Las Vegas and Orlando are also being added to EL AL’s schedule of flights. Closer to home Lisbon will be added starting April 1st with TAP (EL AL has been flying this route for over a year), and EL AL is introducing Manchester. This is a net positive as aside from tourism direct flights are the result of more cross-border business interactions.
Nothing stays the same in the growing Israeli business environment, and while technology has been the driver and the main news-maker political factors in the coming weeks could very much determine confidence in the economy. When it comes to the upcoming Israeli elections and how they will impact the economy one can read the polls and follow the news cycle, but as Shimon Peres famously stated, “polls are like perfume: nice to smell, dangerous to swallow.”