13th World Electronic Forum Israel 4-8 November 2007 Elisha Yanay- Chairman IAESI – Israel Association of Electronics & Software Industries

WORLD ELECTRONICS

RFID for Mfg Webinar in a box Warehouse SDM Direct Mail Manufacturing Sequential DPM Google ad words Teleseminar in a box Lunch & Learn RFID Healthcare USA JAPAN CHINA TAIWAN HONG KONG PHILIPPINES THAILAND INDIA SOUTH AFRICA BRASIL FRANCE SLOVAKIA GERMANY ISRAEL WORLD ELECTRONICS AUSTRALIA EUROPE

October 2007 Worldwide Economic and Market Conditions

World Electronics & Economic Growth (Year-Over-Year % Change) Blue - Elec., Green - GDP Economics Matters… GDP Electronics

New Orders Electronics Equipment (Rates of Change) Latest Plot: July 2007 Green - 3/12, Blue - 12/12 Hi-Tech Orders Growth OK

For World Expansion Continues 2007 will be a good (but not great) year World growth will remain uneven U.S. economy weakening; Asia charges ahead Expansion in broad hi-tech industries continues Double-digit sales upside for 2007 – weaker U.S. consumer may impact handset sales Plan for other contingencies

World Economic Growth Solid… Real GDP Growth (Year-Over-Year % Change)

Key Takeaways Good world growth into 2007 – U.S. weaker –Consumer spending off –Capex/government solid Probability of downside shock at ~25% Industry expansion continues at 8-10% pace

The Electronic Industry Is The Locomotive Of The Economy

The Technology Adoption Curve Is Faster and Faster …….. Sources: IEC Resources, Gartner, NetRatings, Scarborough Group Number of years US percentage of ownership Telephone Electricity Radio PC TV Cell Phone Internet

Aerospace & Defence Industrial Consumer CommunicationsComputer Hardware Security ApplicationsSemiconductorTransport Aftercare Medical

The Stimulating Effect Of Public Funding on R&D OECD אופטימום U.S. Increased public funding strengthens the stimulating effect Growth of the stimulating effect decreases Public funding compensates corporate efforts The chart is directional and the figures include uncertainty. Share of public funding in corporate R&D spending, % The stimulating effect of public funding on R&D Source: Tekes (statistics from 17 countries, compiled over a period of 15 years). Israel EU-25 Ireland \ Finland OPTIMUN

R&D expenditure as % of the GNP WW comparison ISRAEL SWEEDEN FINLAD JAPAN ICELAND USDENMARKKOREA SWITZERLAND OCDE GERMANY AUSTRIAFRANCE EU BRITAINCANADABELGIUMHOLLANDNORWAY LUXEMBURG AUSTRALIA CZECKIRELADITALYNEW ZELANDSPAIN HUNGARYPORTUGALTURKEYGREECEPOLANDSLOVAKYMEXICO

Electronics Market Growth World 3.3% CAGR 4.9% CAGR 4.7% CAGR 4.5% CAGR * $940M$1,466M$2,328M EMEA $256M$412M$571M *Forecast data do not include inflation Source: Reed Electronics Research

EMEA Electronic Market ($ Millions) Market Fundamentals EMEA Electronics Market 27% of World *Forecast data do not include inflation Source: Reed Electronics Research

Global Electronic Production over $1.5 trillion at end 2006

Asia/Pacific China almost double in 4 years

The Telecom Industry

Wireless Networking Infrastructure

Software: is The Next Big Wireless Challenge Software Hardware Wireless Imaging User interaction Nano platforms Mobile middleware Service discovery Distributed architecture & algorithms Distributed node and application management Mobile agents Security Nano platforms Mobile middleware Service discovery Distributed architecture & algorithms Distributed node and application management Mobile agents Security New wireless Software defined radio Cognitive radio New wireless Software defined radio Cognitive radio motion, touch sensitivity Location Image & gesture recognition Sociable interfaces motion, touch sensitivity Location Image & gesture recognition Sociable interfaces New hardware architectures Low-power processors Solid-state storage Batteries & fuel cells New hardware architectures Low-power processors Solid-state storage Batteries & fuel cells Flexible displays Micro projectors Passive displays Flexible displays Micro projectors Passive displays

Ready for Take-Off