15-20% of personnel from Israel's tech companies and university research centers have been drafted into the military, creating a vacuum in the country's R&D capabilities. To bridge this gap, some Israeli AI firms have begun ramping up their R&D operations in Taiwan.
This has come in response to Hamas leader Ismail Haniyeh's assassination in Tehran in July 2024, a move that has set the stage for potential large-scale military retaliation from Iran against Israel. Israeli security officials anticipate an Iranian attack as soon as August 15.
Israel's tech ecosystem, a hotbed for innovation and startups, is now facing severe disruptions. Intel, which operates four R&D and production sites in Israel employing nearly 12,000 people, has put its US$25 billion investment in a new semiconductor facility on hold as of June 2024.
The company has also canceled supply contracts and relocated senior executives to the United States. It is a move widely seen as a reaction to the escalating Middle East tensions.
Despite the escalating conflict between Israel and Hamas, Taiwan's representatives in Israel remain in place, having concluded after consultations with other diplomatic missions that the security risks remain manageable. Most foreign embassies in Israel continue to operate normally. Meanwhile, the United States has dispatched submarines and aircraft carriers to the Middle East to stabilize the volatile region.
In Israel, the war has triggered mandatory military service for all citizens, regardless of gender. This mobilization has impacted roughly 15-20% of employees across schools, research institutions, and private companies, exacerbating the already tight labor situation in the tech sector. Before Iran's anticipated military strike, Israel had already faced cyberattacks from groups like Muddy Water and Darkbit, both reportedly linked to Iranian intelligence.
Companies like Taboola, founded by Adam Singolda in Tel Aviv in 2006, are feeling the pinch. With part of its workforce conscripted, the advertising platform has had to outsource significant portions of its workload to overseas branches, including its R&D center in Taiwan.
Meanwhile, Mellanox, the Israeli company acquired by Nvidia in 2020, is also grappling with the loss of employees to military service, posing challenges for its operations in supercomputing, AI, and cloud computing. As the conflict intensifies, other Taiwanese firms with operations in Israel are also adjusting.
While some companies are facing manpower shortages due to military conscription, most have implemented risk management strategies to mitigate the impact on their operations. Israel's large cybersecurity and software companies are turning to cross-border collaboration, outsourcing, and generative AI to minimize the disruption to R&D and business activities.
