Executive: Chinese, Indian Engineers Pose No Threat to Israeli High-tech

VP, President &GM of Freescale Israel says industry aided by stable workforce and intellectual property protection.

Israeli high tech workers have felt threatened in recent years by Chinese and Indian engineers. But David Galanti, VP, President &GM of Freescale Israel, thinks there is no immediate threat. Despite the relatively low salaries paid to engineers in the Far East, Israeli and multinational companies will prefer to continue working with Israeli engineers, he said.

There are three reasons for this, said Galanti: Workforce stability; the high wages of executives in the Far East, who earn almost as much as their American counterparts; and protection of intellectual property rights, which is a problem especially in China.

"Engineers in China and India are less attractive today," he said.

"Five to ten years ago it seemed that our entire industry was moving to India and China, but in the last two to three years the situation has changed. Large companies realized that Asian markets move very quickly in terms of personnel. Turnover of 20% to 30% per year for engineers is normal there, and that is a lot for a company. A situation where the training period for an engineer can reach a year, and he works for the company for an average of two years, is not economical. In addition, managers in India and China who manage projects or hundreds of employees earn higher salaries than in Israel, similar to those in the United States," said Galanti.

There are serious worries about the Chinese keeping business secrets, he added. "It is something cultural, there is no respect for ownership of intellectual property. That is why it is very hard for an American company to transfer strategic development to China," said Galanti. There is little difference between the semiconductor industry and other high-tech sectors regarding India and China, he added. Intellectual property, a problem in China

Now recruiting again

Freescale Semiconductor Israel has some 450 employees and is located in Herzliya Pituah. It was originally the semiconductor division of Motorola before being spun off in 2004. Two years later it was taken private by four huge private equity funds led by Blackstone, at a price of $17.6 billion; and in 2011 the company went public again on the New York Stock Exchange.

Freescale focuses on the automotive, consumer, industrial and networking markets with its product portfolio, including microprocessors, microcontrollers, digital signal processors, digital signal controllers, sensors, RF power ICs and power management ICs. The company also holds an extensive patent portfolio.

The company saw its numbers drop from 600 employees due to the global financial crisis, but is now recruiting dozens of new workers again.

Galanti says the big growth areas in the global semiconductor industry involve the consumer market.

"We see the integration of technologies such as cellular communications, augmented reality, graphics and games. It is clear that this market will bring with it secondary markets such as communications infrastructures and cloud computing, but these secondary markets will show more modest growth," said Galanti.

Not everyone agrees

Shlomo Waxe, director general of the Israel Association of Electronics and Software Industries, does not agree with Galanti that there is no threat to local high-tech from India. "If they produce 300,000 engineers a year in India, and almost half a million in China - and here the number has been frozen for over a decade - we have a problem," he said.

"The threat to Israeli high-tech from India and China has not lessened, and despite the rise in wages in India, an engineer there still costs a quarter of the cost in Israel, on average," said Waxe. The quality and quantity of engineers there is also rising, and they no longer fall short of Israeli engineers, he added.