News Analysis – March 2016

General News Summary

Terror Continues

The wave of Palestinian stabbing and vehicular attacks which began in September 2015 continued into March 2016. According to statistics published by Israel’s Foreign Ministry on March 3, 33 people have been killed in terrorist attacks and 375 including 4 Palestinians wounded in attacks perpetrated by Palestinian assailants. In all, the ministry said there had been 195 stabbings and attempted stabbing attacks, 78 shootings, and 39 vehicular (ramming) attacks since the wave began. Many of the Palestinian assailants have been killed, sometimes by Israeli civilians using legal weapons to prevent carnage.

Most of the attacks have been perpetrated by individuals and recently pairs of individuals who have had no known connection to terrorist organizations. Attacks began not long after three members of the Dawabsheh Palestinian family were killed in a firebomb attack on their home in the West Bank village of Duma in late summer. After a long investigation by the Shin Bet internal security service, two extremist Israelis, a 21-year-old married man and an unnamed minor, have been indicted in the killings. The accused are members of a small group of extreme right-wing settlers whose stated objective is to create chaos that will trigger a chain reaction and eventually bring about the replacement of Israel’s current parliamentary democracy with a monarchy based on religious law. The alleged leader of the group, one of several of its members being held in administrative detention but not directly implicated in the firebombing itself, is Meir Ettinger, the grandson of late American-born Rabbi Meir Kahane, who was assassinated in 1990 while on a visit to the US.

Caution on Syria

Israel has said it welcomes the shaky cease-fire in the Syrian civil war, at the same time expressing caution about what effect, if any, the US-Russian deal struck in late February would have in the long term.

Prime Minister Benjamin Netanyahu, speaking prior to a meeting of his cabinet, stressed that any resolution to the civil war must address Israel’s interests and red lines. “”We welcome the efforts to reach a long-term, stable and substantive cease-fire in Syria,” Netanyahu said. “Anything that would put an end to the terrible slaughter there is important first and foremost from the human standpoint. But it’s important to make clear that any resolution in Syria must include a halt to the Iranian aggression against Israel from Syrian territory.”

The Israeli red lines, Netanyahu indicated, include transfer of weapons, particularly advanced weaponry, from Syria to the Iranian-backed Hizballah in South Lebanon, establishment of a terrorist front on the border between Syria and the Israeli-held Golan Heights, which the Israeli leader called “the red lines we have presented from the start, and they remain our red lines.”

Defense Minister Moshe (Bogie) Ya’alon cast doubt on the effectiveness of the cease-fire, saying that after the cessation of attacks was supposed to take place, forces loyal to Syrian President Bashar al-Assad had used military-grade chemical weapons against insurgents and dropped barrels of deadly chlorine gas on civilians. Ya’alon, speaking at a conference in Airport City, not far from Tel Aviv, provided no details.

Tunnel Threat

Criticism has welled up inside and outside Prime Minister Benjamin Netanyahu’s coalition over Israel’s response – or lack of response – to the threat posed by attack tunnels penetrating under Israeli territory adjacent to the Gaza Strip. A recent report by State Comptroller Joseph Shapira pointed to “grave deficiencies” in Israel’s preparation for tunnel attacks prior to 2014 Operation Protective Edge. And both Education Minister Naftali Bennett and Opposition leader Isaac Herzog have called for stronger action in the wake of reports by residents of Israeli border villages about hearing the sounds of digging under their homes.

Chief of Staff Lt.-Gen. Gadi Eizenkot rejected Bennett’s call for a preemptive strike to neutralize the tunnels, noting that the IDF has spent considerable resources on anti-tunnel detection and warfare over the last two years. According to one report, Eizenkot said that the IDF has deployed “dozens, if not 100” engineering vehicles on the Gaza border.

The Hamas rulers of Gaza have not hidden the fact that they are digging tunnels, to replace those destroyed by the IDF in 2014 and beyond, in preparation for another confrontation with Israel. At the same time, it gave an indication that some countermeasures may already be in place, reporting that it had discovered sensors and other electronic equipment in the wreckage of a tunnel that collapsed in mid-February.

Defending the General

Prime Minister Benjamin Netanyahu came to the defense of Chief of Staff Gadi Eizenkot, after the IDF commander had come under fire for statements in defense of the army’s rules of engagement to terror attacks. Speaking to a group of high school students on February 17, Eizenkot said that current regulations were sufficient, and that “troops can act only if there is a threat to life.” The general then added: “I don’t want a soldier to empty a magazine on a girl with scissors.”

Opposition leader Isaac Herzog of the Zionist Camp and Yair Lapid, the head of the Yesh Atid party, immediately voiced support for Eizenkot. Jewish Home leader, Education Minister Naftali Bennett, also backed Eizenkot, saying that soldiers should hit hard at those who endanger lives, not those who don’t. Eizenkot, Bennett said, was merely reiterating what was obvious, the rules of engagement under which the IDF and its soldiers are trained to operate.

Intelligence Breach

Disclosures that the US and Britain had been intercepting information from Israeli UAVs constitutes a serious intelligence breach, Israeli officials said in late January, after disclosures of the spying emerged from documents released by former US intelligence analyst Edward Snowden. According to reports, the two powers had been able to break the encryption code of messages sent from Israeli UAVs, as well as other defense systems, among them the Arrow missile defense system and operation of advanced fighter squadrons, in Operation Anarchist, which has been ongoing since the late 1990s.

According to a report in Yediot Aharonot, the UAVs “collect intelligence on the Gaza Strip, West Bank and across the Middle East, and have even been used to collect intelligence for a possible Israeli strike in Iran. At least two models of these UAVs are armed with missiles and bombs used for targeted killings.

Israel upgraded the encryption of transmissions by its UAVs, which play an increasingly important role in defense operations, with their bases almost 20 years ago. According to Yediot Aharonot, the UAV has become “one of the main tools, if not the central one, used by the Israeli defense establishment to gather intelligence and launch special operations. There is almost no operation in the IDF today, or many operations in other intelligence agencies, in which a drone does not take some part.”

There have also been reports that the US National Security Agency has monitored phone conversations by Netanyahu and other Israeli officials, particularly during the prime minister’s unsuccessful attempt to stop the nuclear agreement with Iran.

Aid Talks Stalled

Negotiations over an increase in US aid to Israel reportedly have stalled, after mid-February talks between the two countries could not reach agreement. According to published sources, the US is willing to increase its package of military aid by about $400M, significantly less than the $1.2B Prime Minister Netanyahu reportedly is seeking. Under the terms of an agreement signed in 2007, Israel gets about $3B a year in military aid.

Ha’aretz quoted an unnamed Israeli official as saying that Israel could have received a larger aid package had Netanyahu accepted President Obama’s offer to negotiate an arrangement made in the spring and summer of 2015.

US Vice President Joe Biden is due to discuss the difficulties in reaching an agreement on the aid package in a two-day visit to Israel and the Palestinian Authority during the second week of March.

Argaman to Head Shin Bet

Nadav Argaman has been named to replace Yoram Cohen as head of Israel’s famed Shin Bet internal security service. Argaman, 55, the current deputy head of the Shin Bet, is due to take over from Yoram Cohen in May.

After serving in an elite Israel Defense Forces unit, Argaman joined the security establishment in 1983. He was head of Shin Bet operations in 2003-2007, then spent four years as the Shin Bet representative in the US. Argaman was loaned out to the Atomic Energy Commission between September 2014 and September 2015, returning to serve as deputy Shin Bet chief after Roni Alsheich was named Israel Police commissioner.

Turkish Talks

Israel and Turkey both have reported progress in talks aimed at reconciliation and at least limited revival of the close ties between the two countries, which reached a low point after the 2010 Israel Navy interception of the Mavi Marmara, a Turkish alleged “peace ship” seeking to break Israel’s naval blockade of the Gaza Strip. Nine Turks, who Israeli and international sources say were seeking a violent confrontation with the boarding party from Israel’s Shayetet 13 naval commando unit, were killed in the clash.Israeli and Turkish negotiating teams met in Switzerland in early February and though both sides indicated that while some progress had been made, other key issues were outstanding. Among other things, Israel reportedly is demanding that President Tayyep Recep Erdogan’s government close a Hamas command office in Istanbul as a precondition for normalization. It was unclear how Israel was responding to some of Turkey’s demands, said to include free access to the Gaza Strip and special status on humanitarian equipment and key materials for the construction of infrastructure. According to Ha’aretz, Turkey is not asking for the total lifting of the Israeli blockade, in the belief that its own gaining of free access will be seen as a significant achievement in softening the blockade.

According to various reports, Ankara is particularly interested in renewing military ties with Israel. Istanbul’s Today’s Zaman newspaper has reported that Turkey would like to buy UAVs, surveillance systems and other arms systems employing advanced technology. It should be recalled that in the 1990s and prior to the rise to power of current Turkish President Erdogan, Israel and Turkey had close military ties, including co-production of Israeli systems in Turkey.

In fact, most of the disagreements between Israel and Turkey stemming from the Mavi Marmara incident have already been rectified. Netanyahu apologized, Israel has already made clear that it is prepared to pay some $25 million in compensation to the families of the nine Turks killed, Turkey has deported senior Hamas military wing official Salah Aruri and has tightened its supervision of the organization’s members at Israel’s request.

Meanwhile, Russia has told Israel it has reservations about any impending rapprochement. Russia and Turkey are at odds over Russian involvement in the Syrian civil war, with their relations worsening in November when Turkey downed a Russian jet over its territory. Moscow has accused Ankara of supporting rebel groups fighting the regime of Syrian President Bashar al-Assad and of providing at least tacit support to the Islamic State (ISIS). Istanbul says that Moscow backs Kurdish rebel groups which attack Turkish targets from within Syrian territory, and of complicity in the Assad regime’s ethnic cleaning of civilians in Aleppo.

Greek Defense Minister Panos Kammenos, visiting Israel in mid-February, cast doubt on the possibility of improved Israeli-Turkish relations. “The fact that Turkey trades with the Islamic State,” the Greek official told Israel Radio, “funds the Islamic State and allows its fighters to enter and leave Syria raises questions in both Israel and Greece.”

The Economy

Growth Higher

Israel’s economy exceeded expectations in the fourth quarter of 2105, growing by 3.3% after increasing 2.5% in the third quarter and 0.4% in the second. The spurt prompted to up its GDP growth figure for all of 2015 to 2.6% from an anticipated 2.3%.

Deficit Lower

Israel ended 2015 with a less than expected budgetary deficit of NIS 24.5B, amounting to 2.15% of Gross Domestic Product and substantially below the annual target of 2.9%, the budget’s own 2.75% estimate and the 2.5% recommended by the Bank of Israel. About half of the NIS 6.9B difference came from higher than anticipated tax revenues, the rest from lower government expenditures.

The lower deficit was surprising considering that growth for the year, an annual 2.3%, was below expectations due to reduced exports and lower spending.

January Tax Revenues

Exceptionally high tax collection in January, especially purchase taxes on automobiles, led to a fiscal surplus of NIS 3.9B, the Finance Ministry reported. The budget for 2016, passed late last year, envisages an annual deficit of 35B, or 2.9% of GDP. The government’s deficit over the past 12 months was 2.2% of GDP.

S&P Rating

Standard & Poor, the international rating agency, has repeated its A+/A1 rating for Israel, saying it expected the Israeli economy to “weather potential volatility in the global economy and international financial market, thanks to its diversified economy, strong external position, and flexible monetary framework.”

Importing Workers?

Prime Minister Benjamin Netanyahu reportedly wants to deal with a shortage of software engineers by importing high-tech workers, according to a report by Israel’s Channel 10 TV station. According to the report, hundreds of visas for high-tech workers will be issued, then expanded to thousands of work visas. The plan, if implemented, could have the effect of lowering salaries in the high-tech sector.

Romania Route

Low-cost airline Wizz Air plans to operate two flights a week on a new route between Tel Aviv and Iasi in Romania beginning July 1. Wizz Air already flies between Israel and nine East European destinations – Bucharest and Cluj-Napoca in Romania, Budapest, Warsaw and Katowice in Poland, Prague, Sofia, Vilnius in Lithuania and Lviv, Ukraine.

No Leviathan Gas for Cyprus

Negotiations to supply gas from Israel’s offshore Leviathan field to Cyprus have ended in failure. The partners in Leviathan, the Delek Group, Delek Drilling and Avner Exploration, all from Israel and US firm Noble Energy, informed the Tel Aviv Stock Exchange in mid-February that they were unable to reach agreement with the Cypriot government. Negotiations are, however, still under way about gas from Cyprus’s Aphrodite field.

Meanwhile, the operators of Leviathan say they will begin delivering gas in 2019; in a report to the Ministry of Infrastructure, they said production would reach 21 billion cubic meters (BCM) a year, 5 BCM more than the originally predicted output.

Partner Rebrands

Israeli cellphone service provider Partner Communications has completed its rebranding after breaking off its connection with Orange last year over the French firm’s president’s statement that he would break ties with Israel. The provider, which had ties with Orange for 17 years, now calls itself Partner, has changed its logo’s design and color from orange to turquoise, and says it plans to evolve into a digital communications group from its status as a purely cellular company.

Term Extended

The term of Securities Authority chairman Shmuel Hauser has been extended for three years, to give him time to implement a plan for bringing more investors back to the Tel Aviv Stock Exchange (TASE). The exchange, which despite a modest recovery last year, has seen volumes dwindle since 2010, with the loss of passive investments after Israel was upgraded to developed market status from emerging index compiler MSCI.

Hotel Stays Down

Hotel stays by foreign tourists were up 2% in January, compared to January 2015, but down 22% compared to January 2014, the Israel Hotel Association said. The Knesset, hoping to lower prices in Israeli hotels, in mid-February gave initial approval to a law that would streamline the planning process for hotels and it is hoped, speed the construction of new hotels, boost supply and drive down the price of hotel rooms.

Finance & Investment

Buyer Lost, Another Found

Two days after its agreement to sell Phoenix Insurance to Fosun of China was called off, billionaire Yitzhak Tshuva’s Delek Group said in mid-February that it has found a buyer. Though Delek declined to name the potential purchaser, Ha’aretz identified the buyer as AmTrust Financial Services of New York. The paper said AmTrust would pay NIS 1.7B (about $461M) for Delek’s controlling share in Phoenix, which was slightly less than the NIS 1.8B offered by Fosun. The good news, however, was that AmTrust’s offer is less likely than Fosun’s to run aground due to regulatory difficulties.

Alcoa Invests in Phinergy

Global aluminum giant Alcoa has invested $10M in Phinergy, a developer of batteries for electricity-powered vehicles based in Lod, near Ben-Gurion International Airport. Founded in 2008, Phinergy uses technology developed by Israel’s Bar-Ilan University to generate electric power from a combination of aluminum, oxygen and water. The two companies have been cooperating for almost three years.

Credorax Windfall

Credorax, the Herzliya-based merchant clearing bank, is due to register a profit of $20-$30M from the sale of its small holding in Visa Europe to Visa International as part of the international firm’s $20B-plus acquisition of Visa Europe. According to Yediot Aharonot, the Israeli firm is also in the process of raising an additional $50M from Asian strategic financial investors.

Exit Not Only Option

Vonetize, an Israeli developer of VOD streaming technology, isn’t sold on the idea of an exit, according to CEO Noam Josephides. In a mid-January interview with London’s Financial Times, Josephides said that a public offering will only be “a step on the way” to the company’s first milestone. “We want to build a huge company,” Josephides is quoted as saying. “That is clear to us.”

According to Globes, Vonetize 2015 sales of $20M are projected to rise after the signing of marketing agreements in Latin America, Africa, and other emerging markets. The company’s product, which is reminiscent of Netflix, includes content from major US film studios, such as Disney, Warner Brothers, MGM, and Miramax, and is classified as a premium streaming service. It is also available through smartphones and smart television.

Saban’s New Fund

Israeli-born billionaire Haim Saban has set up a new fund to invest $100M in Israeli start-ups in the mobile, social networks, ecommerce and digital media sectors, in which there is synergy with Saban’s other businesses including Israeli mobile operator Partner Communications. Saban, an Israeli who was born in Alexandria, Egypt, is best known for his media investments in the US and as a creator of the popular Power Rangers characters.

BOI Changes Investment Policy

The Bank of Israel, seeking better return on its money, will invest 10% of the state’s $90.5B in foreign currency reserves in foreign equities in 2016. The move exposes the central bank to more risk and higher potential returns than its traditional holdings of top-rated government bonds. The bank will still keep 84.5% of reserves in foreign government bonds.

Mergers & Acquisitions

M&AS Soar

Mergers and acquisitions involving Israeli high-tech companies rose to $7.2B in 2015, up from 2014’s $5B. At the same time, initial public offerings by Israeli companies declined sharply, from 2014’s $9.8B to $3.5B in 2015, according to the annual report by the PWC international consulting firm.


Harman International, headquartered in Stamford, Connecticut, has acquired automotive security specialist TowerSec of Kfar Saba, Israel and Ann Arbor, Michigan for an estimated $70M. The transaction, in early January was 2016’s first exit of an Israeli company. TowerSec has developed real-time, embedded software security products to protect connected vehicles from hacking and intrusions.

Mellanox-Ezchip Deal Approved

The proposed merger of Israeli companies Mellanox and EZChip, announced in September, got the go-ahead from shareholders in late January. The $811M acquisition was in doubt after a November meeting where the deal was taken off the agenda when it became clear that the required 75% majority could not be attained. Founded and managed by CEO Eyal Waldman, Mellanox develops and markets organizational data communications equipment. EZchip, founded and managed by CEO Eli Fruchter, develops and markets chips for network communications routers. The two companies are located close to each other in Yokneam, in northern Israel, and their respective founder-CEOs have said in the past that the deal was fashioned when they ate together at restaurants in the area.

Valtech Sale Cancelled

HeartWare, a US company, has canceled its planned acquisition of Israel’s Valtech Cardio, which had been announced by the two companies last September. The Valtech exit was the biggest for Israeli high-tech in 2015, bringing annual totals for exits and deals to the highest level in several years.

HeartWare cited changed business circumstances for the cancellation. Valtech, based in Or Yehuda east of Tel Aviv, has developed trans-catheter technology for the treatment of heart valve insufficiency in cardiac patients.


Sony, the Japanese electronics giant, is purchasing Israel’s Altair Semiconductor in a deal valued at $212M. Altair, based in Hod Hasharon northeast of Tel Aviv, aims to play a leading role in developing Internet of Things sector with 4F chips that speed up communications without using excess energy. Altair‘s customers include Verizon Wireless. Its investors include SanDisk Ventures, Bessemer Venture Partners, BRM Capital, ETV Capital SA, Giza Venture Capital, Jerusalem Venture Partners (JVP), Jerusalem Global Ventures and Pacific Technology Partners. The company’s funding round two years ago, was $25M from Gerogian businessman Yitzhak Mirilashvili’s fund, Vaizra Investments.

Sony operates a development center in Ra’anana, in the high-tech belt northeast of Tel Aviv. The center specializes in sensors for security cameras, and on hardware for cameras in Sony smartphones.

SES-RR Media

SES, a Luxembourg-based satellite communications company, has purchased Israeli digital media firm RR Media for $242M, a 52% premium over RR’s NASDAQ closing price on the day preceding the sale. RR Media, based in Lod not far from Ben-Gurion International Airport, provides digital media services to more than 1,000 media companies globally, managing and delivering over 24,000 hours of broadcast content, over 4,000 hours of online video and VOD content and over 350 hours of premium sports and live events including major global sporting events such as the Super Bowl and the FIFA World Cup. RR Media provides coverage for over 95% of the world’s population, reaching viewers of multi-platform TV operators and populating content to over 100 Video-on-Demand (VoD) platforms.


Cisco Systems reportedly has purchased Israel’s Leaba Semiconductors for $380M. Leaba, founded in 2014, has developed technology that increases the efficiency of routing between servers and communications systems. It’s the second time that Leaba’s founders, CEO Eyal Dagan and CTO Ofer Eini, have sold a cutting-edge chip-production company; the first was the 2009, $178M sale of Dune networks to Broadcom.


Formula Systems, an Israeli subsidiary of Poland’s information technology-centered Asseco Group and Israel Aerospace Industries, have entered into an agreement for the acquisition of TSG, a specialized provider of command and control, intellingence and cybersecurity systems. Purchase price for TSG, a subsidiary of Israel’s Ness Technologies reportedly was in the $50M range.

Top End Minerals-Anyvision

Australia’s Top End Minerals has entered into an agreement to purchase Tel Aviv-based AnyVision, an Israeli developer of facial recognition technology, for $6M. Founded in 2015, the company specializes in homeland security but says its technology can also be used in financial services, gaming, pathology, agriculture and the control of home devices.


Providence Strategic Growth (PSG), a US private equity firm, has acquired a controlling stake in Israeli firm Skybox Security for $80M. The Israeli firm, with offices in Herzliya Pituah and Silicon Valley, has developed software system that detects vulnerabilities in enterprise IT systems. PSG has also invested an additional $16M in Skybox.

Clicktale-Flight Recorder

Clicktale, a digital customer experience start-up based in Ramat Gan, in the Tel Aviv metropolitan area, has acquired FlightRecorder, a Turkish app developer with offices in Istanbul and San Francisco. Terms were not announced.


ICL Industrial Products, a subsidiary of Israel Chemicals, has sold its Clearon business unit to a subsidiary of China’s Dalian Hui Yu Xin Technology Development for an undisclosed sum. Clearon manufactures water-treatment chemicals for the pool and spa industry.

Second Sale

MIS Implants, a dental implant firm headquartered in the town of Shlomi near Israel’s northern border, is due to be sold for the second time in five years – this time at a value of $400M – to private investors or a medical devices firm, according to a report in Calcalist. MIS was purchased five years ago by TA Associates, a Boston-based private equity firm now seeking to realize its investment.Oracle-Ravello

Entrepreneurs Benny Schneider and Rami Tamir have sold the Ra’anana-based data storage company Ravello Systems for around $500M. Ravello’s client list includes Deutsche Telecom, Check Point, 888, Amdocs and McAfee. Schneider and Tamir are quintessential serial entrepreneurs who have been involved in six exits worth over $500M since 1999.

Ravello is the sixth company Schneider and Tamir have sold over two decades. The others are Fantom (sold to Cisco Systems for $118M in 1999, P-Cube, to Cisco for $202M in 2004, Schneider’s B-Hive, sold for $50M to VMWare in 2008, Qumranet, for $107M to Red Hat in 2008, and Schneider’s Traffix, for $140M to F5 in 2012.

RNTS Media-Inneractive

German mobile ad technology platform RNTS Media will fully acquire Inneractive, an Israeli mobile RTB-based ad exchange for $46M cash and a further $26M in potential milestone payments. Inneractive is a mobile RTB-based ad exchange focused on powering display, native and video ads, is headquartered in Petah Tikva, northeast of Tel Aviv, and has offices in New York, San Francisco, and London.

Forbes Picks

An article in Forbes has pointed out 16 Israeli start-ups worth watching in 2016. The selections, by contributor Yoav Vilner, are:

1. Unmove, a maker of face and eye recognition technology;2. LogDog, which warns of suspicious logins; 3. PulsePlay, a sports watch;  4. Mapme, a “smart” mapping tool; 5. story-telling platform Apester: 6. Webyclip, specializing in videos for ecommerce sites; 7. Guesty, a management tool for Airbnb hosts; 8. Roojom, specializing in interactive content; 9. ZCast, a social network for podcasters; 10. SpotIM, an online publishing tool; 11. RoundForest, an ecommerce tool; 12.SaferVPN, enhancing virtual private network security; 13. Kidoz, accessing safe digital tools for youngsters;        14., which simplifies the process of ordering ecommerce videos;  15. Zuta Labs, a revolutionary method of printing and 16. Shopnfly, a digital duty-free shopping platform already used in about 100 airports around the world.

Science & High Technology

Banner Fundraising Year

Israeli high-tech industry had a very good year in 2015, raising a total of $4.43B in 708 deals, which was the highest ever number of financing rounds on record. The figure was up 30% from 2014’s $3.42Bn on 690 transactions, according to an annual survey by the KPMG-IVC research firm. Average deal was $6.3M. The increase was spurred by a record-setting fourth quarter in which $1.2B was raised in 202 high-tech financing deals.

Advanced Sensor

Israel’s Tower Semiconductors, an international specialty foundry company, has collaborated with image-sensor supplier Pixelplus of Korea and Panasonic to produce state-of-the-art high and full-definition security sensors, which the parties claim is capable of unprecedented performance. The sensor, designed for security cameras, has a potential value to Tower of hundreds of millions of dollars.

High-Tech School for Arab Israelis

A new innovation school for Arab Israelis opened in mid-February in Kafr Kassem, northeast of Tel Aviv. The school, which will include an accelerator for start-ups, is aimed at increasing Arab participation in high-tech industries. Sponsors of the school include MEPI (Middle East Partnership Initiative), a regional program sponsored by the US State Department, Tsofen, an Israeli Arab-Jewish organization promoting the integration of Arab Israelis in high-tech industry, and the MIT Enterprise Forum.

DevOps Funding

Jfrog, a Netanya-based specialist in DevOps, has raised $50M from existing investors and new participants Scale Venture Partners, Sapphire Ventures, Vintage Investment Partners and Qmra Capital. The money will be used for development of its platform for DevOps, aimed at automating the process of software development and delivery.

Deal With Microsoft

Taboola, an Israeli content discovery platform developer, has signed a deal to offer content suggestions on MSN sites in 50 countries. Neither side stated how much the deal is worth, but this likely means that Taboola‘s suggestions will be reaching the 397 million unique users around the world, who visit an MCN page every month.  Taboola enables websites to offer readers links to related articles from their own websites as well as from other publishers. It currently offers 30 billion suggestions to sime 750 million unique users a month. Its business partners include USA Today, Business Insider, the Chicago Tribune, L’Express, Die Welt, Marie Clair and the Daily Mail.

Amazon Selling Israeli Chips

Amazon, the global marketer, has begun selling its own line of ARM-based silicon chips. The Alpine brand chips are made by Annapurna Labs, an Israeli firm it acquired in January 2015 for a reported $350M.

Alzheimer’s Blood Test?

A team of Israeli scientists discovered a biomarker in the blood linked to Alzheimer’s disease, raising the possibility of a relatively simple blood test for early detection and possibly treatment to prevent development of the malady, which currently affects about 35 million people worldwide. Activity-dependent neuroprotective protein (ADNP) is essential for brain formation and cognitive function. Other tests have shown links between high ADNP levels and high IQ scores.

The team, headed by Prof. Ilana Gozes of Tel Aviv University, includes researchers from the Haifa Technion, Haifa University and Harvard University in the US.

ADNP levels in blood may reflect what is going on in the brain, though we need to do further comparisons to get a good picture,” the Israel 21C website quoted Gozes as saying. “A blood test for ADNP can tell us what is happening in the brain and we need to refine our technology to use it.”

Third Partner for Mobileye

Mobileye, the developer of acident prevention and autonomous driving technology, has signed an agreement with Nissan to place its Road Experience Management into cars made by the Japanese automaker. The Jerusalem-based company, founded by the forner head of the Hebrew University’s computer department, has similar agreements with General Motors and Volkswagen.

Flame Retardant Deal

Israel Chemicals and Albemarle Corp., a worldwide leader in flame retardants based in Baton Rouge, Louisiana, have entered into a long-term agreement to market polymeric flame retardant manufactured at an ICL facility in the Netherlands.

Familiar Voice

The voice of movie star Morgan Freeman will be providing directions on Waze, the popular Israeli driving-directions app. Other familiar voices who have appeared on Waze to promote new movies have included Arnold Schwarzenegger and comedian Kevin Hart.

Aerospace & Defense

Defense Spending

Israel spent 5.2% of its Gross Domestic Product on defense in 2015, placing it seventh on a list of military spending complied by Deloitte, the global consulting firm. Biggest spender as a percentage of GDP was Oman, with 11.6%, followed by Saudi Arabia’s 10.4% and South Sudan’s 9.3%. In absolute terms, Israel’s military spending of $15.9B ranked 17th on a list headed by the US’s $610B, China’s $216B and Russia’s $84.5B.

Defense Exports

Defense exports reached $5B last year, due to a December spurt in new contracts. The Defense Ministry previously set the annual number at $4.5B, less than the figure for 2014. Several factors made 2015 a difficult year for defense exports: greater competition abroad, a freeze on deals in Brazil for political reasons, delays in India due to regime change, tightening defense budgets and many countries increasingly favoring their own domestic defense contractors.

Cyber Export Restriction Debate

The Israeli government is weighing the effect that Defense Ministry proposals for tighter control of cyber exports will have on what has become an important part of the country’s defense industries. Draft amendments to the law proposed late last year call for the restriction of four product categories – advanced forensics, defense of strategic networks, intrusion software and vulnerability detection.

The stakes are large. Prime Minister Benjamin Netanyahu said in a recent speech that Israel was one of the world’s top five cyber powers, with $3.5B in 2015 cyber-related exports. Netanyahu said that the Israeli market is larger than all other nations combined apart from the US. Cyber companies have cautioned that the new rules, based in part on the iWassenaar Arrangement of dual-use export controls and a three-year interagency review involving the National Cyber Bureau, Defense, Foreign and Economy ministries and the National Security Council, would impose restrictions that would cripple their ability to compete in world markets.

According to a recently released survey, 403 Israeli firms are operating in the cyber sector, with nine of them registering annual revenues of $10M or more.

Magic Wand

Israel’s Magic Wand missile defense system successfully passed its final series of tests late last year and is due to become operational sometime this spring. Some units of the medium-range missile interception system have already been delivered to Israel Defense Force units, who are training in the use of the new system.

An official of Rafael Advanced Defense Systems, which has developed Magic Wand over the course of a decade together with Raytheon, the US defense contractor, said that the system contains “”next generation technologies that do not exist in other systems in the world.” In the test, the system located potential threats, carried out interception plans, chose the right plan and launched interceptors, hitting their targets precisely from long distance and at high altitude.

Magic Wand is designed to fill the gap between Israel’s longer-range Arrow missile defense system and its shorter-range Iron Dome interceptor, both of which have already been deployed.

Barak 8 India Test

The Barak 8 sea-to-air missile system successfully passed two interception tests in the Indian Ocean in late December. The system, developed by Israel Aerospace Industries and India, was fired from the Indian Navy’s INS Kolkata, a vessel that is significantly larger than the Sa’ar-5 corvettes used in a previous test of the system. Barak 8, designed to deal with threats from hostile aircraft, missiles and rockets, is due to become operational for deployment on ships of the Israeli and Indian navies within 1-2 years.

Coastal Defense System

Israel Military Industries says it has completed development of its Coast & Islands Defense System (CIDS), which integrates radar, missiles and UAVs to target vessels which are at sea, far from the coastline. Designed to protect economic waters (like Israel’s offshore gas fields) as well as actual coasts and islands, CIDS was shown at a defense show in Singapore in mid-February. According to IMI officials, the system, which has an effective range of up to 150 km, was recently sold to an unnamed foreign country.

New IDF Comm. Campus

Five private contractors, Minrav Holdings, Ashtrom Properties, the Azrieli Group, Shapir Engineering and Shikum and Binui Holdings, are likely to bid on the contract to build the IDF’s planned new NIS 7B communications campus in Beersheba. According to Globes, bidding on the project was due to begin in mid-February, with a decision expected in about two years. The center, to be located near Ben-Gurion University and the Gav Yam Advanced Technology Park, is due to house all of the IDF’s military communications units and the headquarters of the army’s Southern Command.

New Defense Company

Mordechai (Modi) Ben Ami, an IDF reserve colonel, will be the CEO of Tomer, a new government defense company to be set up to deal with classified activities formerly handled by soon-to-be-privatized Israel Military Industries, and to protect “vital security interests.”

New Elbit UAV

Elbit Systems, the private defense contractor, has launched a new autonomous mini unmanned aircraft system. Called Skylark3, the mini-UAV best suited for brigades and divisions in “beyond the next hill” reconnaissance, counterinsurgency and force protection missions, border and coastal security and anti-terror operations. The new system has already been selected by an undisclosed customer. Skylark3 reportedly has a range of more than 100km, improved payloads, longer time in the air than previous models in Elbit’s Skylark UAV line. Elbit also unveiled a new version of its UT30 Mark 2 unmanned turret system in February at the Singapore defense show.

Elbit’s Sub Fighter

Elbit Systems says that Seagull, a new unmanned surface vehicle (USV) system the defense contractor unveiled in mid-February, can bring about a radical change in anti-submarine warfare. The two-vessel USV can fire small torpedoes, as well as detecting and blowing up underwater mines while substantially lowering costs by replacing the large naval task forces commonly deployed to combat undersea threats.

“We take sailors out of the minefield,” says one Elbit official while explaining how the system operates: Potential threats are located with sonar sensors on the bow and stern of one vessel, after which the second vessel lowers a robot into the water to gather additional data. When a threat is confirmed, the USV launches a wire-guided torpedo which it provides with sonar guidance data until the USV nears its target, when the torpedo switches to its own electro-optic camera.

Korean Venture

Government-owned Israel Aerospace Industries and Hankuk Carbon, a South Korean composite manufacturer, have agreed on a joint venture to develop, market and manufacture vertical take-off and landing (VTOL) unmanned aerial vehicles, and may expand the cooperation to add take-off and landing capability from ships to the package. According to forecasts, the 10-year potential market for VTOL UAVs amounts to $4.3B. Hankuk and IAI previously co-developed a VTOL hybrid propulsion system, with funding from the Korea-Israel Industrial R&D Foundation.

Germany Chooses Heron TP

Germany’s Bundeswehr plans to lease Heron TV unmanned aerial vehicles manufactured by Israel Aerospace Industries, to protect German soldiers deployed around the world. The German army has deployed a smaller member of IAI’s Heron family, the Heron 1, in Afghanistan for more than a year. Defense Minister Ursula van der Leyen said the leasing contract, valued at 600M euros, is intended to bridge the period until 2015, when a new European combat UAV is due to enter service; German, France, Spain and Italy agreed last year on development of the European UAV.

IAI‘s Heron TP was chosen over the MQ9 (formerly Predator B) manufactured by General Atomics of the US Unlike the smaller Heron 1, Heron TP, a MALE (medium altitude, long endurance) UAV can be armed if necessary.

Hermes Upgrade

Elbit Systems has upgraded the Israel Air Force’s fleet of its Hermes 900 unmanned aerial vehicles to improve the drone’s capability to deal with terrorist threats across Israel’s borders and with quickly-vanishing hostile cells. Hermes 900 UAVs have been deployed by the Israel Defense Forces for about two years.

New UAV Producer

Meteor Aerospace, a new Israeli company whose founders include former IAI CEO Itzak Nitzan, has introduced its first line of products, including an unmanned aerial vehicle which can remain aloft for 24 hours and carry a 150 kg payload, and unmanned ground vehicles. The new company’s base and production facilities are located in Modi’in, east of Ben-Gurion International Airport and about halfway between Tel Aviv and Jerusalem.

Namer Gets Trophy Protection

Trophy, the active protection system for armored vehicles developed by government-owned Rafael Advanced Defense Systems and IAI‘s Elta Group, has been fitting on Namer, Israel’s advanced armored personnel carrier. The system, called Me’il Ruah (Windbreaker) in Hebrew and developed after the Second Lebanon War, has already been fitted on IDF Merkava battle tanks. Brig.-Gen. Baruch Matzliah, head of the Defense Ministry’s armor authority, says Namer fitted with the system “will provide IDF soldiers with the highest level of protection and provide then with security and a significant advantage on the battlefield.”

Wing Sets Ordered

Lockheed Martin has ordered 40 more F-35 Lightning II stealth fighter wing sets from Israeli Aerospace Industries. IAI is scheduled to produce more than 800 pairs of F-35 wings, with a potential value of $2.5B, during the next 10-15 years.

Since starting production in 2015, IAI has produced six wing sets on its state-of-the-art production line and is due to deliver a total of 12 sets during the first half of 2016.

LCA Integration Completed

Israel’s Rafael Advanced Defense Systems and IAI have completed the integration of radar systems in India’s light combat aircraft (LCA), according to a report on the India Defense Research Wing ( website. The integration includes IAI subsidiary Elta Systems EL/M-2023 fire control systems with BVR air-to-air missiles on the India Tejas MK-1 aircraft, as well as Rafael’s longer-range Derby missiles.

Romania Buys Spike

Romania has purchased Spike missiles made by Rafael for about 18M Euros, according to a report by Resboiu, a Romanian-language website. Seller was EuroSpike GmBh, which markets the missiles in Europe. Romania has also purchased command and control equipment worth 80M euros from EuroSpike.

Tail Frames for Boeing

IAI will manufacture tail frames for the future Boeing 777X airplane, in an agreement valued at hundreds of millions of dollars according to IAI estimates. IAI’s civilian division will produce both the horizontal and vertical parts of the tail frame. The government-owned aerospace company will continue making frames for the current Boeing 777 models for the entire lifespan of the program. It currently produces frames for 10 777s a month, and for the Boeing 787 Dreamliner.

IDF Appointments

Senior Israel Defense Forces staff appointments approved by Defense Minister Ya’alon: Maj.-Gen. Kobi Barak, Ground Forces Command; Maj.-Gen. Aharon Haliva, Logistics & Technology Directorate; Maj.-Gen. Eli Sharvit, Israel Navy; Maj.-Gen. Nadav Padan, Technology & Telecommunications Branch; Brig.-Gen. Mickey Edelstein, military attaché to the US.

Elbit Contracts

Private defense contractor Elbit Systems has been awarded a $250M contract to supply electronic warfare systems for Israel Air Force F-15 and F-16 aircraft. Elbit also won a $50M contract to supply a comprehensive airborne intelligence, surveillance, target acquisition and reconnaissance system to an unnamed Asia-Pacific customer. Work will be performed over three years.

Elbit also announced that Affinity, a joint venture with KBR, has won a British Ministry of Defense contract to supply advanced flight training programs for British air crews. Anticipated revenues to Affinity are expected to reach £500M over 18 years.

Polish Competition

IMI and Lockheed Martin, the giant US defense contractor, have reached the final stage of competition for a $500M Polish Ministry of National Defense contract for the procurement of precision rockets. The rockets are part of a billion-dollar Polish modernization program that includes launcher vehicles, command and control systems and tactical intelligence-gathering UAVs. Government-owned IMI has offered Poland its Predator Hawk rockets, capable of delivering deliver a 200-kg warhead to within 10 meters of its target, at a range of up to 250 km., as well as the EXTRA rocket, with a 120-kg warhead and a range of 150 km. In a separate development, the Polish Armament Inspectorate will pay $150M for 1,000 Spike anti-tank guided missiles to be fitted on its Rosomak APCs.

Defense Budget Increased

Israel’s 2015 defense budget allocations were increased to NIS 59.5B in late December, when the Knesset Finance Committee approved a NIS 2.5B supplementary allocation. The security establishment claimed that the original budget would not allow it to carry out its missions. Opposition lawmakers said that the move, at the end of the fiscal year, made the original budgetary allocations “fictitious.”

Multiple UAV Control

IAI unveiled its new UAV Mission Operational and Intelligence Center (MOIC) at the Singapore Air Show in mid-February. The MOIC is designed to improve performance of multiple unmanned aerial vehicles by replacing separate platforms for each UAV. IAI also unveiled its new range of civilian cyber solutions, dealing with threats to ground, air traffic, avionics and other on-board systems, at the Singapore show, as well as two new members of its family of loitering munitions – Harpy NG, with improved flight capability and radar, and Green Dragon, a tactical and low cost LM for deployment with ground units. Green Dragon is all-electric, has up to two hours of loitering time over a target, is capable of locating, acquiring and diving on targets selected by a remote operator carrying a warhead of about 3 kg.

Rafael Acquires DSIT

Rafael reportedly has acquired DSIT Technologies, a specialist in underwater detection, acoustic analysis and sonar detection based in Givat Shmuel, just outside Tel Aviv. DSIT was established by Israel Navy veterans. According to Frost & Sullivan, DSIT developed the system that detected a team of Hamas divers that was about to attack Israel’s southern Kibbutz Zikkim during 2014’s Operation Protective Edge. Its technology has applications in defense of ports and other shoreline security installations.

Ophir Shoham Leaving Mafat

Ophir Shoham, head of the Defense Ministry’s Research Authority, Development of Ammunition & Technological Infrastructure (MAFAT), is leaving his post after six years. During Shoham’s term, the Iron Dome and Arrow 3 anti-missile systems made significant advances. Shoham, who had served in the IDF and the defense establishment for more than 36 years, was in the second class of Talpiot, the IDF’s famed technology development unit.

Katsav-Shamir Drops IMI BID

A group consisting of Mivtah Shamir Holdings, owned by businessman Meir Shamir, and Sammy Katsav’s SK Group, has withdrawn from the bidding for government-owned IMI. The two main groups still in the bidding are Elbit Systems, Israel’s largest private defense contractor, which is owned by Israeli businessman Michael Federmann, and Invictus Holdings, founded by Flextronics for the purpose of bidding for IMI. Meanwhile, IMI said that its revenues rose by 18% to NIS 2B in 2015, while the orders backlog increased 50% to NIS 7.3B.

Ha’aretz quoted sources close to one bidder as saying that IMI is worth far less than the NIS 1.1B ($280M) minimum bid set by the Government Companies Authority, saying IMI was not worth more than NIS 600–700M and that conditions the government has attached to the sale, including moving facilities to the Negev and ensuring job protection for employees, will cost hundreds of millions more than the government says.

One source said the only real contender was Elbit, because it had the financial resources to invest hundreds of millions more in IMI after it acquires it. It isn’t at all clear, the sources said, why Flextronics is in the bidding, since it has no arms-making operations of its own. That view seemed to be confirmed in late February when Amir Levi, head of the Finance Ministry’s Budget Branch, was added to Government Companies Authority head Ori Yogev and the team of Treasury officials negotiating with Elbit.

Indian Upgrade

Rafael and India’s Kalyani are cooperating to upgrade BMP II armored personnel carriers for India. According to the Defense World website, the work on the APCs, a 1980s Russian design manufactured under license in India, is being performed on the Subcontinent. The upgrade includes Rafael’s Samson Mk II firing positions for Spike LR missiiles, and a MiniPop sight.

NATO Country Contract

Controp Precision Technologies of Hod Hasharon, northeast of Tel Aviv, has won a contract to supply 90 of its SHAPO day-night observation systems to an unnamed NATO country. Controp develops and manufactures long-range, intruder detection systems for a variety of defense and civilian applications. Value of the deal was not announced.

High-Flying Ambitions

SkyFi (formerly NSL Comm), an Israeli company that aims to revolutionize global Internet connectivity with a planned network of 60 nano-satellites, has raised $3M from Jerusalem Venture Partners (JVP) and Liberty Israel Venture Fund. SkyFi says its nano satellite with a flexible sub-reflector may provide Internet access from everywhere on the planet, at much lower cost than conventional satellite communications.

IAI Dispute

Finance Minister Moshe Kahlon reportedly is seeking the early ouster of Ori Yogev, head of the Government Companies Authority, whose term of office has another year to run. Yogev has been seeking the removal of Israel Aerospace Industries chairman Rafi Maor for what he says is “improper management” of the government-owned defense contractor and his role in readying IAI for privatization. The Yogev-Maor dispute also involves former IAI union head Haim Katz, a Likud politician who currently holds the Welfare portfolio in Prime Minister Netanyahu’s government.

Printing Aircraft Parts

The Economy Ministry’s Office of the Chief Scientist is investing in Atid, a cooperative venture of Israel companies seeking to develop 3-d printing of titanium aircraft parts. In addition to the ministry, the group is led by Cyclone, a subsidiary of Elbit Systems, and will deal with using Israel Aerospace Industries, Israel Military Industries, Orbit, Elgat, Kas and Adama, plus academic researchers from Tel Aviv University, Ben-Gurion University, the Technion’s Institute of Metals and Afeka College. Chief Scientist Avi Hasson predicts that 3-D printing “will have a significant effect on the manufacturing process in the future.”

New Factory

Drusenet, which supplies sophisticated parts for unmanned aerial vehicles, has opened a new plant at Isafiya on Mt. Carmel. The factory is unique because 22 of its 30 employees are women and members of Israel’s Druse community. Drusenet, founded with the help of IAI, is one of the first opportunities women from the conservative Druse society have had for high-tech employment.

IMI Rockets to Vietnam

Israel Military Industries is selling 20 accurate EXTRA rockets to Vietnam, according to a report in Israel Defense and other websites, Vietnam has also purchased SPYDER-SR missiles and S-125 Pechora-2T. EXTRA, which according to one website has not entered IDF service, is fired from cluster launch tubes, has a range of around 150 km, weighs about 150 kg and is accurate to within a radius of 10 meters, missile circular error probability (CEP) of about 10 m. The Defense Blog website suggested it may be deployed on small islands off the Vietnamese coast.