Vote of confidence in Israel’s economy in the face of war

By Amb. (ret.) Yoram Ettinger, “Second Thought: a US-Israel Initiative”
January 16, 2024,

Irrespective of Israel’s wars against Hamas and Hezbollah, Intel, the semiconductor giant, confirmed a $25 billion investment in Israel, leveraging Israel’s brain power, which has enhanced Intel’s competitiveness in the global market.  Over the last 50 years, Intel has invested over $50 billion in Israel, establishing 4 research and development centers, despite the potential for wars and actual wars and terrorism.

Intel will expand its Israeli chip factory, in order to diversify its manufacturing potential amid a chip arms race (New York Times, December 27, 2023).*Challenged by a unique environment – top heavy on terrorism and war, but low on natural resources and rainfall – Israel has bolstered its do-or-die state of mind, with defiance of odds, risk-taking, frontier, pioneering, optimism, patriotism, can-do and out-of-the-box mentality. This has yielded a robust flow of game-changing commercial, defense and dual-use technologies.

Israel entered the current wars with positive economic indicators, such as debt-to-GDP ratio in the low ‘60% (compared with 123% in the US) and an all-time high foreign exchange reserves of $200 billion.

Intel’s $25 billion investment in Israel is driven by the Israel’s unique competitive edge, as detailed in the following October 23, 2023 report by the St. Louis-based Stifel Investment Bank ($390BN asset management):

“We believe that there are several key factors supporting the resilience of the Israeli market in the face of conflict, and the confidence of large multinational companies making large acquisitions in Israel, including during wars.

“Some of those key factors include:

• The strongest military in the region….
• Key strategic assets in Israel held by leading U.S. and other global ‘Blue Chip’ corporates with billions of dollars of investment respectively…
• A source of key cutting-edge technologies for US and global high-tech giants [e.g., Intel, HP, IBM, Google, Cisco, Microsoft, Apple] ….
• Chevron with billions of dollars in Israeli offshore gas interests, is a strategic alternative source of gas to the European Union particularly considering issues with Russia] …
• A 75-year-old partnership with the US, built on mutual interests and shared values….
• Military cooperation [with the US], joint development of military technology [and battle tactics], and regular joint military exercises involving the U.S. military….
• A manufacturer of key military equipment for the U.S. military….
• Israel has a history of numerous brilliant military victories throughout its history, when it had a far weaker military and far worse odds….
• Israeli companies, management teams and people have demonstrated strong operational flexibility, adaptation, and resilience in times of conflict, and experience in dealing with reserve duty absenteeism and remote working….*”We [Stifel Investment Bank] have analyzed the impact of 4 previous Israeli conflicts with a range of both duration and gravity including the 2014 Gaza War – Operation Protective Edge, the 2008 Gaza War – Operation Cast Lead, the 2006 Lebanon War, and the 2nd Intifada (2000).“Our analysis examines the impact on the Tel Aviv Stock Exchange (TASE) as well as strategic transactional activity during and following the respective conflicts.*“The analysis reveals very strong resilience in the face of such Israeli market shocks, and with the exception of the 2nd Intifada (2000) – which was highly correlated to the dot-com bubble – the impact of historical conflicts on TASE have been minimal with the TASE experiencing single digit or negligible conflict related impacts, and an almost immediate rebound and strong short and long term performance post conflict….

  *”It is also noteworthy that throughout historical periods of conflict, there continued to be strategic M&A [Merger and Acquisition] activity with multinational strategic companies making material acquisitions in Israel during and immediately post conflict….”

  *According to Intel’s CEO, Patrick Gelsinger: “The Israeli people are the most resilient people on earth” (FOX Business, December 13, 2023).