Economy of Knowledge: 362 R&D Centers of Multinational Companies
26 December, 2019
They account for 18% of the total income from direct tax in Israel. Top technology clusters are: Machine Vision, IoT and Cyber Security
Photo above: Selected Active MNCs in Israel by Location
A new report published by IVC, GKH and IATI reveals that the depths and scope of Multinational Technology Companies involvement in Israel has reach ed such a level that it influences the National Budget calculations. The term Multinational Technology Companies (MNC) refers to a foreign corporation that controls the R&D or owns a high-tech company in Israel (some entities such as Intel and HP have in addition to R&D large manufacturing facilities in Israel).
With the growth of M&A activity in the last two decades, the presence of MNCs has become an integral part and a major contributor to the Israeli tech ecosystem. According to the report, there are 362 active multinationals in Israel (in 2019), employing approximately 62,000 employees. Israeli based MNCs are about to pay nearly $8.85 billion taxes in 2019 (based on tax payment of $142,500 per employee). This amount is equivalent to approximately 2.6% of Israel’s estimated GDP for 2019, and 18% of the total income from direct tax, which is expected to be $48 billion this year.
Intel is the Biggest MNC in Israel
The majority of MNCs in Israel are U.S. based corporations, accounting for 63% of the 362 companies. While there was a noticeable German presence in 2016 and Chinese presence during 2017, currently there is no other country with any significant presence other than US. The three top technology clusters in MNCs in Israel are: Machine Vision, IoT and Cyber Security. Approximately 32% (115 companies) of all MNCs develop technologies in at least one of these clusters.
Many MNCs started as a result of M&A deals (70% of all M&As between 2014 and 2019 were by foreign companies). Most global companies acquiring Israeli startups are from the US, with a steady number of more than 50 exit deals each year. Most active corporate buyers of Israeli companies in the last 5 years are Google (10) and Microsoft (8). Intel, on the other hand, is the most active corporation in Israel. During 2014–2019, Intel Capital participated in 52 investment deals and Intel corp. acquired 5 companies totaling $17.5B. The largest number of employees is in a manufacturing facility (Intel Fab in Kiryat-Gat) and not an R&D center.
The full report: Multinational Technology Companies in Israel
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