RAD Group High-Tech Project “Engineers from the Periphery” Presented by: Yehuda Zisapel Proposal for a national undertaking in Israel

Engineers from the Periphery Slide 2 Contribution of High-Tech to the Israeli Economy Over 50% of Israel’s Exports, i.e. $16 B 21,300 engineers from a total of 60,000 workers Sales per worker: $300K High-Tech activity primarily in the center of the country Result: The country center becomes more wealthy and the socio-economic gap widens

Engineers from the Periphery Slide 3 Export Domestic Sales of Electronics and Software Products in Israel, ,596 5,310 6,000 6,840 7,800 9,980 10,380 11,530 14,750 15,500 13,040 13,170 15,800 16,700 18, , ,000 16,000 14,000 12,000 20,000 M$

Engineers from the Periphery Slide 4 High-Tech is the country’s Growth Engine Market Money Capital Human Capital

Engineers from the Periphery Slide 5 Technological Markets on an upward trend Israel now has a 1% market share of the worldwide technological market Conclusion: No market constraint regarding growth potential Source: Bureau of Economic Analysis, Morgan Stanley Technology Research US-based Information Technology as a Percentage of Nominal Business Capital Equipment Spending

Engineers from the Periphery Slide 6 USA vs. Israel: Total Capital Invested in Venture-Backed Companies US$ Billion Source: Ernst & Young; VentureOne

Engineers from the Periphery Slide 7 Summary: Conditions enabling the development of High-Tech Conditions: Market – unlimited Investment Capital – searches for qualitative technological ideas; also unlimited Bottleneck: Human Capital – shortage of quality manpower and quality education Quality Human Resources to generate ideas and create investment opportunities is the Engine of High-Tech

Engineers from the Periphery Slide 8 Developing Human Capital Manpower increase from country center – growth potential: 5% Manpower increase from the periphery – growth potential: 100% Conclusion: Development of High-Tech in the periphery using the Atidim Project as a model

Engineers from the Periphery Slide 9 Atidim Model Participants are high school graduates, pre-Army, from the periphery Target Population: Minimum personal attribute qualifications “Bagrut” certificate – poor or none No chance of acceptance to a college or university Project Track: Preparatory course (“mechina”) of one year Conclusion of “mechina” and university entrance exams Study in normal university courses Track Record: Student success rate: top 15% IDF “Atudah” academic program

Engineers from the Periphery Slide 10 Objective: to adopt “Atidim” model which has proved itself Participants: From the periphery IDF veterans Preference to combat unit veterans Target number of participants: 1500 per year University Partnering – Universities which have expressed their willingness to participate: Technion Hebrew University in Jerusalem Tel Aviv University Ben-Gurion University of the Negev Bar Ilan University

Engineers from the Periphery Slide 11 High Tech Project in the Periphery Training & qualification of 1500 engineers from the periphery each year Immediate budget of $16,500,000 per year to $82,500,000 fixed, after 5 years Increase of High-Tech by $10B within 10 years Critical mass of quality manpower is the Engine of our economy: Years12345 Investment in $1,00016,50033,00049,50066,00082,500

Engineers from the Periphery Slide 12 Contribution of a High Tech Engineer to the Employment Market Years in High Tech1234 № of Workplaces 1245 № of Years in Employment

Engineers from the Periphery Slide 13 Effect of High-Tech on Production & Employment Growth Years of Program Years in Industry12345 Additional Workers in High Tech Additional Production, Dollars, $M № Years of Program (№ Years in Industry) (1) 7 (2) 8 (3) 9 (4) 10 (5) Number of Engineers Additional Production, Dollars, $M Additional Workers in High Tech Additional Production, Dollars, $M

Engineers from the Periphery Slide 14 Effect of the Program on Export Growth Accumulated Production Increase, $M № Years in Program

Engineers from the Periphery Slide 15 Effect of the Program on Employment Growth № Years in Program Total Additional Workers in Economy

Engineers from the Periphery Slide 16 Return on Investment № of Years in the Program Income Tax Payments, $M № Years in the Program Income Tax Payments, $M

Engineers from the Periphery Slide 17 Socio-Economic Gap in Israel Present Growth of High-Tech Industry – center of the country Effect on Socio-Economic Gap – it widens Center Periphery

Engineers from the Periphery Slide 18 Solution to Socio-Economic Gap Engineers from the Periphery Development of High-Tech in the periphery will aid in decreasing the socio-economic gap in Israel CenterPeriphery

Engineers from the Periphery Slide 19 Implementation of “High-Tech in the Periphery” Execution Technion Alumni Association & Technion 100 Club Financing Philanthropists/Contributors: First year “mechinah” 4 years of study: Bank Loans (Bank Leumi agreement)

Engineers from the Periphery Slide 20 thank you for your attention