Israel Semiconductor landscape

This overview aims to provide a global outlook on the semiconductor market, its notable players, and innovative startups with focus on Israel. In this article, the different types of semiconductor companies will also be explained, and?the countries of Israel and China?will be further developed.? This article will showcase the startup space in this industry as well.

You can find a compiled list of major players, startups, and venture capitalists in the semiconductor?industry?here,?feel free to review and add companies.??

In 2020, the semiconductor industry was worth USD426 billion and?is expected to grow to?USD803.15 billion in 2028 at a CAGR of 8.6% in the forecast period, 2021-2028.?The large growth in the semiconductor industry is attributed to the increasing consumption of consumer electronics and the emergence of artificial intelligence and the Internet of Things (IoT). In addition to this, companies are?trying to improve their chips and push technology boundaries according to Moore’s law. As we push further into this?digitalized era, the demand for innovation in the semiconductor space will be ever-increasing. A multitude of venture capital firms are now solely focused on investing into this sector and corporate venture capital investments have been increasing yearly.?

In the startup capital of the world, Israel, the semiconductor industry has grown and thrived. Israel is home to multiple leaders in this sector like Intel and?Samsung. Multiple companies have set up?R&D?centers there to?increase?innovation into their products.?As this industry develops, companies?that previously were not a player in Semi?such as?Facebook are looking to open hubs there and?Israel will continue to?grow its capacity for innovation as investments into startups continue to grow.?

In China, the semiconductor industry is growing quickly.?Currently, China is heavily reliant on the imports of?critical semiconductor equipment like photolithographic tools that are vital in the production sequence of chips.?The government of China is pushing to be an industry leader in the foundry sub-sector as well as Wafer Fabrication Equipment (WFE) sub-sector and is pouring incredible amounts of money into this goal. China has also the manpower base and supplies chain resources to do so.?In this regard, China is adamant about bringing the knowledge and the physical know-how back to its homeland. As of now, the growth?of the Chinese semiconductor industry is extremely high with some companies seeing a ~25% year-on-year growth. We believe that China will be the next Japan in the semiconductor industry and will see a boom?in growth in the coming years.?

Overall,?the market?foresees?huge growth in this industry and its supply chain?doubles itself?to a trillion dollars a year in?only?a decade.?This sector will only get increasingly?consolidated,?and companies will have to invest large amounts of money into R&D to maintain/grow their lead.?Innovation is key to this industry and?capital-intensive,?disruptive?technologies like Extreme Ultra-Violet (EUV)?lithography?will continue to grow?including?in?China?despite?US efforts.?Electronic spending will only increase as the world becomes increasingly digitalized and becomes more reliant on better, faster, and smaller chips. Like the oil and gas industry in the past, we believe that the semiconductor industry will?grow to?become an economical heavyweight.??

?Background?

With the development of?automotive,?IOT,?AI, and 5G technology,?the?global semiconductor industry?has been put in?the spotlight.?The main driving factor in?this?area is?the?increasing?utilization?of consumer electronics and the?demand?for integrated circuits?across multiple industries.?Many semiconductor companies are already benefiting from these innovations, with the sector showing strong?growth and profits?over the past decade.?However, challenges ahead are plentiful and?companies that want to remain industry leaders must continue to increase their R&D investments?as chips grow increasingly complicated and complexity in the semiconductor supply chain increases.?

On top of this, the semiconductor market is being increasingly consolidated. In the foundry sector, Taiwan’s TSMC?alone?captures more the 50% of the global chip production market and dominates other foundries.?In the Wafer Fabrication Equipment (WFE) sector, the top 5?companies (ASML, Tokyo Electron, Applied Materials, Lam Research, and KLA) holds 65% of the?market with?state-of-the-art?equipment. ASML for example remains at the?forefront?of the lithography sector with an essential monopoly over its?EUV technology costing over USD120 million apiece?and is publicly called a monopole by many?of the?semi players.?

Currently, the market is experiencing a lack of chips?due to a reduced forecast?and?reduced?production capacity.?On top of this, with the current pandemic, chip demand has never been greater.?This is?attributed mainly?to the creased?production?generated by lockdowns and?the increase of demand?as electronic sales skyrocket in the work-from-home environment.?This shortage is now spilling over into the electronics sector and the automotive sector,?which has faced the greatest scarcity?and?has grown to be?ultra-dependent?on chips?(8-10% of global production).?This shortage?may?cause?a slowdown of the market?in the near future?as some companies are now?ordering?and keeping?inventory/materials that?will?cause bottlenecks, moving from order "just in time" to be "just in case" to avoid downtime?says VP?and GM?of?fab management?GlobalFoundries?Mr. Ten Yew Kong.?In this regard, legacy chips have?proved to be the most acute in the chip shortage?with?the foundry and?packaging capacity not being sufficient.?Due to the pandemic, many plants that?were closed are?opening up?again, however,?foundries and packaging plants take weeks to reach full operating capacity.?

In terms of semiconductor components, memory devices are expected to drive large market growth due to the rise of cloud computing and virtual reality. The high prices for NAND and DRAM chips will also play a role in this regard. Logic devices like signal processing are also expected to display high growth rates in the coming years.??

In terms of countries, currently, Taiwan manufactures over 60% of the world’s semiconductors and is home to both TSMC and UMC, with the former dominating over 50% of production. These 2 companies are labelled as foundry companies, which produce chips for various semiconductor designers like Apple and Nvidia. In this regard, Taiwan plays an outsized role in the foundry sector and continues to dominate the market.?

Meanwhile, having once been associated with the semiconductor industry, Japan is now facing a stalling chip sector. This was mainly attributed to the ‘lost decade’ where Japan saw a steep reduction in economic growth. This decline in growth shows how fast-paced and quick-moving the tides can turn in this sector. However, even though their growth has been hampered the past few decades. Japan’s semiconductor industry is still large and boasts reputable names like Toshiba and Hitachi.??

Europe?as a whole has?been trying to boost its semiconductor portfolio which has been squeezed by the global shortage.?With its major chip designers like Infineon Technology AG and NXP Semiconductors NV outsourcing,?a portion of?its production of chips?to companies like TSMC, its dependency on chip-making technology from non-EU?countries is proving difficult. In response to this, the bloc has vowed to increase production to at least 20% of the global supply by 2030.?With that, the EU has a strong base of Wafer Fab Equipment (WFE) suppliers that support the production of chips.?It houses strong companies?such as?ASML which holds a monopoly over cutting-edge wafer fabrication technology that foundries need to sustain growth.?

In the US, chip companies continue to exceed expectations as new technology is being rolled out.?Fabless chip designers?like Qualcomm and Nvidia continue to see growth in the sector even though they have mostly outsourced their chip production.?With the US remaining at the forefront of technology like machine learning and artificial intelligence, its semiconductor industry is continuing to see growth?due to its deep supply networks as well as its ease of access into overseas markets.?While the U.S. industry continues to?drive this?industry, it also faces clear challenges as it seeks to maintain its leadership into the future.?

Back home in Singapore,?the industry is?thriving,?and?the country?continues?to?remain the manufacturing hub?of Southeast Asia,?hosting?companies?like GlobalFoundries, Micron, and Infineon. These companies have invested in multiple fabs?in Singapore with each semiconductor fabrication plant, each?costing upwards of a?billion?dollars to build.?The sector contributes to more than 30% of the country’s output and continues to grow.?

Global Demand in the Semiconductor Industry?

Despite the global pandemic and resulting economic downturn, the semiconductor industry remained resilient, finishing 2020 with revenue growth of 6.5%. The semiconductor industry will continue to grow due to the mainstream adoption of IoT, 5G, and the increasing semiconductor needs of the automotive sector, according to the 2021 Global Semiconductor Industry Outlook from?KPMG and the Global Semiconductor Alliance.?

The top strategic priorities?of the industry?over the next 3 years?were?also discussed?in the report where?an?overwhelming majority decided that executing growth initiatives is key. This is due to the expected rise in demand in the following years. Growth initiatives are necessary for companies to put themselves in the pole position to satisfy the needs of the market. The next important strategy?was talent development, followed by making the supply chain more flexible and adaptable.?

Of the seven component types that make up the semiconductor market—memory, logic, micro-component, analog, optoelectronic, sensor, and discrete—sales of memory products will maintain the largest share of semiconductor revenues. Demand for chips related to the rapidly growing use of artificial intelligence (AI) will contribute significantly to the industry’s overall growth. Much of that demand is coming from the automotive and industrial markets, the two fastest-growing areas.?

The overall industry is expected to achieve?market?growth to hit?USD500?billion?by?2022?in Deloitte’s?report.?When observing the semiconductor industry split by component type to forecast market trends, it is notable to observe that Memory chips and Micro-components are expected to rise the most.?

?TSMC (Taiwan Semiconductor Manufacturing Co.), considered the world’s leading chip maker, is about to set up a?USD12?billion?plant in Arizona and has already received approval for government subsidies. As an example of the huge investment required for a fab: in 2020, TSMC's budget for production infrastructure upgrades alone was some?USD16?billion. In addition, US government subsidies for TSMC are estimated?at?hundreds of millions of dollars.?

In the US, as part of the infrastructure upgrade program recently approved by the Biden administration,?USD37?billion?was allocated to the chip industry.?Intel, the US's most strategically important technology infrastructure company, announced in April 2021 its intention to invest?USD20?billion?in setting up two plants in Arizona?and?stated that it would be announcing additional investments later this year.??

Intel already plans to invest some NIS 40?billion?(USD12.2?billion)?in its Israeli fabs, not to expand manufacturing activities with existing technologies, but to develop future advanced manufacturing capabilities.?

Strength of Israel’s Semiconductor Industry – active and growing big players

Israel has had strong ties with semiconductor industry for decades and has been the innovation capital for the industry. Several key products of Intel originated from Israel, including Centrino, Core 2 Duo (Dual Core), Ivy Bridge and Sandy Bridge. Being known as the startup capital of the world; Israel is rife with budding companies that drive hardware developments with software needs.

Recently, Apple, Amazon, and Microsoft also began developing chips in Israel. Now Google is joining the party. "Globes" has also learned that Facebook plans setting up a chip development fab in Israel. These tech giants extremely competitive, and Israel is becoming their main playing field. In fact, almost all chip developers have an Israeli presence, and for some, this activity is their most significant outside of their home countries.

Trends: Israel’s export to China

China has emerged as Israel’s second-largest trading partner country, and semiconductors have become a vital component of their economic relationship. According to Israel’s Export Institute, the nation sold USD2.6 billion worth of semiconductors to China by end 2018, accounting for 56 percent of Israel’s exports to China. That same year, Chinese purchases of inspection equipment for semiconductor manufacturing from Israel climbed 64 percent, reaching USD450 million.

China has also heavily invested in Israeli semiconductor startups. The Chinese investment fund, Neng Yang spent USD35 million in 2019 to acquire Advanced Dicing Technologies (ADT); an Israeli company that develops specialized machinery for cutting silicon-based chips and microelectronic components. Besides this, a multitude Chinese firms, such as Baidu, Pingan, Qihoo, Shengjing 360, and Yongjin Group, have all invested in Israeli venture capital firms that fund Israeli semiconductor companies.

Conclusion

Ever since Intel entered Israel’s market, Israel’s semiconductor space has only been growing, building upon the strong eco-system of companies that range from design to the fabrication of chips. The influx of major, multinational companies and innovative startups in this space marks Israel as a leader in the field, as these more companies acquire and integrate Israeli-based technologies into their systems. The large acquisitions of Mobilay and HAVANA by Intel, FB, UCT and other new multinationals activity in Israel are just some examples of game-changing companies investing into the Israeli landscape focused on deep technology for the sector; providing playin grounds for innovation with talent and technology available for startups. With tailwinds from the growing semi market (expected to double in 10 years to a trillion dollars) and China's goals of reaching independence in semiconductors, Israel will remain and strengthen its position as one of the hubs for semiconductors in today’s economy.

Thanks Matthew, Akash and Chow Ching for the help.

The list below describes some of the large semiconductor players residing/involved in Israel:?

Company and Activity in Israel

Intel

With more than 20K employees, Intel plans to invest some NIS 40 billion in its Israeli fabs, not to expand manufacturing activities with existing technologies, but to develop future advanced manufacturing capabilities.

Apple

Developing its LiDAR sensors for iPhone and autonomous vehicles in Israel. (R&D) (fabless)

Amazon

Conducts most of its global semiconductor development for cloud-based machine learning in Israel, and it is reported that Amazon began developing a new networking chip for its server farms here in Apr 2021. [Acquired Annapurna Labs in Israel]

Google

Announced the establishment of a chip development center in Israel earlier this year. Uri Frank (ex-Intel) hired to head this center.

Microsoft

Activity in Israel is smaller in scale where they develop networking chips for data centers. They are however, expected to launch a data center very soon.

Cisco

Developing its Silicon One chip, which enables data centers to meet the constant increase in data consumption, based on technology developed by Israeli startup Leaba Semiconductor, which it acquired in 2016.

Samsung

Samsung has a R&D Institute in Israel founded in 1977. It is running an open innovation team to allow Samsung Electronics HQ to evaluate the possible integration of those technologies into their products. In addition to the local research activities, SRIL is exploring the values of Israeli high-tech companies and academic researchers through the Samsung Group investment vehicles.

Altair

?provide Grid and License Management solutions for chip design companies and sees constant growth in this market.

Applied Materials

Hosts largest R&D site outside the US and hosts Process Diagnostics and Control business unit with roughly 1,800 employees.

Facebook

Plans to set up a chip development fabrication plant in Israel.

Qualcomm

Qualcomm has a R&D center in Israel as well as their corporate venture capital arm operating actively.

Tower Semiconductor

Tower Semiconductor is based in Israel and manufactures specialty integrated circuits for companies like Intel, Broadcom, Panasonic with a revenue exceeding USD1.2 billion capturing around 1-2% of the global foundry market.

Marvell

Marvell has three offices in Israel at Yokneam, Ramat Gan and Petah Tikva. Marvell Israel produces end to end development of Enterprise, Campus and Datacenter networking products ranging from Ethernet switches and Storage networking to Server Network Adapters (NICs).

CamTek

Camtek is a leading developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry.

UCT

UCT manufactures production tools for the semiconductor industry. They also provide cleaning systems like QuantumClean. UCT specializes in fluid control systems and mechatronics. In April UCT (ultra clean technologies completed the merger with Ham-Let in Israel which specializes in flow control systems expanding on its the ultra-clean presence.

Mellanox (Nvidia)

Mellanox was founded in 1999 in Israel and specializes in networking technology based on ethernet and Infiniband infrastructure. In 2019, Nvidia acquired Mellanox for USD6.9 billion and is based in Yokneam Illit.

Israel’s Startup Ecosystem

Known as the start-up capital of the globe, Israel is packed with innovative, new companies emerging daily. There are plenty of start-ups within the semiconductor sector as well. Some of them are listed below.

Startup /Description/Financials [Latest Round]

IP Light?

IP Light develops advanced Optical Transport Network (OTN) processors (either as ASSP, Application Specific Standard Products, or as FPGA IP cores) that enable carriers to take the leap into super broadband mobile services, deploying C-RAN based mobile networks or enhancing the capabilities of OTN optical networks quickly and cost effectively.

Venture Round: USD720,000

Celeno?

Wi-Fi is the digital foundation of the home and due to its ubiquity, has already become the dominant wireless connectivity technology for the delivery of IoT.

Series G: USD10 Million

Total Fund Raised: USD116 Million

Annapurna Labs (Amazon)

Annapurna Labs is an amazon company. We are inventing the next generation of cloud computing infrastructure and the storage/networking industry as a whole.

Acquired for USD350-370 Million

Satixfy

SatixFy designs next-generation satellite communication systems based on in-house developed chipsets. SatixFy develops a line of satellite communication modems with Software Defined Radio (SDR) and Electronically Steered Multi Beam Antennas (ESMA) to support the most advanced standards, such as DVB-S2X

Series B: USD20 Million

Total Fund Raised: USD45 Million

May IPO soon

Valens

Valens is the inventor and the world leader in HDBaseT technology and a top provider of semiconductor products for the distribution of ultra-high-definition multimedia content, through a single cable, according to the needs of its target markets: AV, automotive, industrial, and consumer electronics.

Series E: USD65 Million

Total Fund Raised: USD164 Million

Habana (Intel)

Habana Labs focuses on developing disruptive solutions that are shaping the future of AI and Deep Learning computing in the data center cloud and on-premise. Habana was founded in 2016, launched products for AI Inference and Training in 2018 and 2919, respectively, and was acquired by Intel in 2020.

Series B: USD75Million

Acquired for USD2 billion

Autotalks

Autotalks is a fabless semiconductor company devoted to vehicle-to-everything (V2X) communications for manned and autonomous vehicles. Founded in 2008, the company is privately held with strong financial backing from leading global venture capital funds, OEMs and Tier1s. The company headquarters are in Israel with offices in North America, Germany, France, China, Japan and Korea.

Corporate Round: USD20 Million

Total Fund Raised: USD90 Million

Hailo

Hailo is developing a breakthrough specialized deep learning processor, that empowers intelligent devices with the performance of a data center-class computer, operating in real time at minimal power consumption, size and cost.

Series B: USD60 Million

Total Fund Raised: USD87 Million

CoreTigo

CoreTigo is developing a reliable and secured wireless network system to support tens of IoT nodes at a latency of milliseconds. CoretTigo’s system will replace the serial wired cables in industrial control applications, taking the Industrial Revolution 4.0 to the next level. At CoreTigo, we believe that our technology and solution will one day replace most of the serial wire cables in critical mission applications in the world.

Series B: USD13 Million

Total Fund Raised: USD32 Million

ColorChip

ColorChip brings high speed data transmission to the world’s top mega-datacenters and enterprises. We are the pioneering global leader of hyperscale single-mode solutions, leveraging our patented SystemOnGlassTM platform to deliver robust yet compact optical transceivers that support immense rates of data-intensive traffic. Our high-speed solutions and end-to-end production processes push mega data centers and social media providers far into the future and bring communities everywhere closer together.

Venture Round: USD17 Million

Total Fund Raised: USD153 Million

Wiliot

Wiliot is a fabless semiconductor company whose mission is to scale the Internet of Things by connecting people with products with cloud connected, sticker sized, Battery Free Bluetooth tags. Wiliot has a research and development team based in Israel, operations in Germany and business development in San Diego, California.

Series B: USD20 Million

Total Fund Raised: USD89 Million

Inuitive

Inuitive designs powerful multi core processor ICs that serve as the vision processor for Smartphones, Augmented Reality and Virtual Reality devices as well as Robots, to name a few of the applications that benefit from its technology.

Total Fund Raised: USD23 Million

Altair

Altair Semiconductor, a leading provider of LTE chipsets, plays a pivotal role in the IoT. In February 2016, Altair became part of Sony’s Semiconductor Solutions Corporation, combining its leadership in cellular IoT with Sony’s technology and market leadership

Series F: USD25 Million

Total Fund Raised: USD124 Million

Acquired for USD212 Million

Pliops

Pliops is creating a new category of product that enables cloud and enterprise data centers to access data up to 50X faster with 1/10th of the computational load and power consumption.

Venture Round: USD65 Million

Total Fund Raised: USD105 Million

Anobit (Apple)

Anobit is a fabless semiconductor company based in Israel which makes a key component that improves the performance of NAND flash memory chips, which are used in iPhones, iPads, and iPods.

Series C: USD32 Million

Total Fund Raised: USD72 Million

Acquire for USD390 Million

Trieye

TriEye is a Tel Aviv based semiconductor company solving the low visibility challenge for Advanced Driver Assistance Systems (ADAS) and Autonomous Vehicles (AV).

Series A: USD38 Million

Total Funds Raised: USD41 Million

Xsight

Xsight Labs is a fabless semiconductor company headquartered in Kiryat Gat, Israel with additional offices in Tel-Aviv and Binyamina. In the United States, Xsight Labs has offices in Boston, MA, Raleigh, NC and San Jose, CA.

Series D: Undisclosed

Total Funds Raised: USD100 Million

PARTi (Persys)

Persys is an industry leader in integrative solutions for parts cleaning, refurbishment, and technical services for assemblies and machine parts in the semiconductor, magnetic media, solar, microelectronics, aerospace, and optics industries.

you can find a compiled list of major players, startups, and venture capitalists in the semiconductor?industry?here ,?feel free to review and add a company.

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