Analysts and Investors according to Reuters expect that Israel tech companies will need to fortify security thereby possibly facing disruptions due to the ongoing conflict between Israel and Hamas.
Israel previously had a booming technological industry which Reuters states to be responsible for 14% of jobs and close to 5% of Israel's GDP, making them the country's fastest-growing sector and a key driver of economic expansion.
Reports from last June however saw the worsening of the tech sector's decline that started on 2022 due to political turmoil, increase of inflation and interest rates, faltering of supply chain among others.
It already saw numerous investors and tech firms transferring money out of Israel last March with Riskified, a fraud and risk prevention service, being one of the among the many, with over $500 million.
(Photo : Photo by JAAFAR ASHTIYEH/AFP via Getty Images)
A Palestinian man looks out the window as smoke billows following an Israeli drone strike in the occupied West Bank city of Jenin, on July 3, 2023.
The Israel-Hamas conflict could lead to the diversion of resources namely, requiring numerous tech companies' staffs to be military reservists as said by Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors, in a report by Reuters.
Over 500 multinationals are reported to be operating within Israel including start-ups from Big Tech giants such as Google, Facebook, Apple, and Microsoft. Comments from these companies have been met with either no response or a refusal to comment according to Reuters.
Numerous Israel-based senior officials and CEOs within the tech industry have all commented on the ongoing conflict with a general consensus of closely monitoring the situation and preparing for the possibility of it extending to a long period of time.
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Israel's Tech Decline
The conflict evidently has already resulted in the decline of numerous Israeli-tech firms namely, the largest generic medication manufacturer in the world, Teva Pharmaceutical of Israel, dropped 5.25%, and ICL Group, a producer of fertilizer, saw a 0.7% decline in share price.
U.S. exchange-traded funds that are exposed to Israel, such as the iShares MSCI Israel ETF and the ARK Israel Innovative Technology ETF, experienced declines of 7.8% and 4.9%, respectively.
Mobileye Global, the largest Israeli company by market cap and a U.S.-listed driverless car under Intel's management, decreasing by more than 5%. Tower Semiconductor, an Israeli chipmaker, dropping 5.14%, and Check Point Security, a cybersecurity company, dropping 1.77%.
The recent decline is set to normalize in the coming days in as reportedly noted by Raffi Boyadjian, lead investment analyst at XM under the condition that the war remains within the Israel and Palestinians but by still barring consequences for the involved parties.
Israeli-Hamas Conflict
The ongoing conflict is set to include a full scale invasion that started due to a suprise attack from the Palestinian group Hamas last October 6. The attack saw the firing of thousands of rockets and a rampage, killing hundreds of Israelis and abducting others.
Israel retaliated against the attack with air strikes and ground assaults after it called up an "unprecedented" 300,000 reservists in Gaza according to reports that saw hundreds of people dying. The death tally according to both Reuters and CNN is reportedly more than 900 people in Israel while more than 680 Palestinians. Approximately thousands are injured.
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