High-tech Exports Post First Fall in a Decade

Decline follows two years of solid growth in 2010 and 2011, when technology exports rose 12% and 7% respectively.

For the first time in a decade, Israel's high-tech exports hit a standstill in 2012, receding 1% in dollar terms from the previous year to $21 billion, according to the Israel Export Institute.

The decline followed two years of solid growth in 2010 and 2011, when technology exports rose 12% and 7%, respectively.

"The figures are worrisome and if the trend continues it will have grave implications on the Israeli economy," said Ramzi Gabbay, chairman of the Export Institute. "The economic crisis in Europe and slowdown in the U.S. economy, along with fierce growing competition from companies in the Far East, have a direct effect on the export of Israel's high-tech products. The growing trend of selling start-ups to foreign companies, turning them into development centers at best, hampers the development of Israel's high-tech industry and the creation of jobs in Israel."

Last year's decline was the first since the high-tech crisis in 2001 and 2002, when exports dropped 12.5% and 10%, respectively. Even in 2009, when overall exports fell in the wake of the global economic crisis, high-tech nevertheless maintained a 5% growth rate.

Pharmaceutical exports, accounting for 32% of all high-tech exports, dropped 6% last year to $6.8 billion while exports of communications equipment declined 6% to $2.6 billion. Exports of electronic components rose 13% to $3.9 billion and those of electronic equipment exports by 2% to $3.45 billion. Sales of aircraft overseas grew 4% to $2.1 billion. Medical equipment sales abroad were unchanged at $1.45 billion.

Shaul Katznelson, head of the institute's economics department, said that if it weren't for the increase in electronic component exports by the new Intel plant in Kiryat Gat, high-tech equipment exports would have fallen by 2.5%

high tech
Tomer Appelbaum