Intel Israel has found itself in the news this week for all the wrong reasons. It is the target of threats of demonstration action by the religious community in Jerusalem after the company announced its intention to keep its fabrication plant in Jerusalem open on Saturdays, the Jewish Sabbath. The company's general manager, Maxine Fassberg, was involved in a series of meetings in the Knesset in attempt to avert community action against the company.
Intel as a company, and particularly its Israeli branch, should be in the news for much more positive reasons than this. Intel is the world's largest semiconductor and microprocessor producer. For those less technical, a microprocessor is an integrated circuit that contains the entire central processing unit of a computer on a single chip.
Intel's relationship with the State of Israel goes back over 35 years to 1974 when the first Intel chip design centre was established in Haifa, Intel's first outside of the US. Dov Frohman was instrumental in establishing this Intel presence in Haifa. Frohman joined the Intel Corporation in 1969, a year after it was founded. Here, he discovered the EPROM, the first semiconductor memory that was both erasable and reprogrammable. This was the catalyst that led to a long line of innovation and development that produced today's flash memory technology.
After a short break away from the company, Frohman returned to Intel in 1973 and managed to convince the management to allow him to return to his native Israel in 1974 and set up an Intel presence in Haifa. In 1985, he concluded a series of negotiations with the Israeli government to set up a semiconductor fabrication plant in Jerusalem. Frohman was general manager of Intel Israel until his retirement in 2001. He succeeded in setting up a second Intel fabrication plant in the southern Israeli city of Kiryat Gat. During his time with Intel, he managed to establish Israel as a global centre of excellence for the Intel Corporation. Today, Intel Israel employs more than 5,000 employees countrywide and exports more than US$1 billion per annum.
The achievements of Intel Israel are considerable and legendary. It was the Israeli Intel 8088 chip that was selected by IBM in 1980 for its first personal computer (PC) which launched a new era of computing. This major breakthrough for Intel was hailed as a victory for Intel in the microprocessor wars. By 1986, Intel Israel was producing the 386 chip which was 7 times faster than the 8088. With the continued increase in the speed of chips and decrease in their sizes, a new problem was encountered. More power was required to support the increasing speed and, with it came greater heat output. This caused chips to overheat, and computers were equipped with fans to overcome this problem. For laptops, fans could not be accommodated due to size limitations and chip production had hit the so-called "power wall". The Israeli team set to work to design a chip that could go faster without needing to use as much power and thereby overcome the problem of the power wall. The new chip used a type of gear system, similar to gears in a car, that allowed the chip to work faster whilst maintaining a lower clock speed. This also limited the heat output.
When the Israeli team triumphantly presented its new invention to the Intel headquarters team in Santa Clara, they were met with a less than enthusiastic response. Wall Street analysts would value the company on the basis of the clock speeds of the chips being produced. By developing a chip with a lower clock speed (even though the chip worked faster than other chips), it went against the standard parameters used to value the company. It was a little like trying to convince diamond dealers that the number of carats in the diamond was no longer significant. The Israelis mounted a campaign to convince Intel CEO Paul Otellini and the team in Santa Clara that their chip was the only way to go. Finally, Israeli persistence paid off and the Centrino chip was released in March 2003. Although its clock speed was approximately half of the reigning 2.8 gigahertz Pentium chip, it sold for twice the price. More importantly, it gave laptop users the portability and speed that they needed. The new chip was an immediate success and became the anchor of Intel's 13% growth in sales between 2003 and 2005.
Although Intel suffered revenue losses from increased competition in the period that followed, one bright spot in 2006 was the launch of the new Core 2 Duo chip. This was Intel's successor to the Pentium and incorporated dual-core processing which came directly from the Haifa labs. CEO Otellini claimed that "these are the best microprocessors we've ever designed, and the best we have ever built", at the launch of the new chip at the Santa Clara headquarters. Although Intel's stock price was down significantly during 2006, it climbed 16% after the announcement of the new chip. Today, almost every new computer is sold with a microprocessor that is based on this technology.
It is clear that Intel and Israel have had a relationship which has benefited both. Israeli technological insight, innovation and persistence have all contributed to drive Intel to the leading position that it enjoys in the field of microprocessors. Intel has provided Israel with the ideal opportunity to showcase its best, an opportunity that Israelis have grabbed with both hands.
It seems that it is essential for both Intel and Israel that the problems currently experienced in Jerusalem be resolved as quickly as possible. Intel continues to face a great deal of competition in its market, and Israeli innovation and development is essential for its future. Similarly, the Israeli hi-tech industry needs a company like Intel to allow it to show its capabilities off in the best possible way. After managing to maintain its Jerusalem facility for more than 20 years whilst respecting the Jewish Sabbath, I certainly hope that Intel is able to find a way not to have to change this now. By continuing to respect the spirit of the day of rest now and in the future, Intel can assure itself many years of peace in the Holy City.
With acknowledgement to "Start-Up Nation" by Dan Senor and Saul Singer published by Twelve, Hachette Book Group (2009).
No comments:
Post a Comment