The Evolution of The Israeli Information Technology IT

The Evolution of The Israeli Information Technology (IT) Industry Prepared For: Innovation in Israel @ 60 March 30, 2008

Israel’s IT Strengths § Corporate Entrepreneurship – IBM, Microsoft, Intel, Cisco, Motorola, Google etc. l § Track record (examples) - Intel: Pentium MMX, Banias, Advanced DSP, wireless - Motorola: QUICC family - National: 32000 family - Marvell: Networking switch ICs IT hotbed • • • Demographics - one of the best educated workforces in the world R&D expertise & history of creating premier technologies Defence/military/intelligence related R&D Tremendous concentration of technology leaders Leadership in DSP, Networking & Communications Software, systems and semiconductor knowledge and expertise

Israel’s IT Strengths Cont. § Large ASIC/ASSP customer presence: - Cisco, Alcatel-Lucent, Nortel, ECI, RAD and hot telecom/data-com startups § Innovation and Entrepreneurial culture § Extensive commercial ties with the global community § Modern infrastructure for technological development § Existence of most of the chain: - § IDMs, fab-less IC companies, foundry, test house Generous R&D grants and on going government commitment

Modern Infrastructure for IT Development • • • World-class education institutions such as the Technion (Haifa), Weizman Institute of Science (Rehovot), Hebrew University (Jerusalem), Ben-Gurion University (Beer-sheva), Tel-Aviv University, Haifa University and Bar-Ilan University (Ramat Gan). History of creating premier companies- Amdocs, Comverse, Mercury, Check Point A well established presence of multinational companies (not only IT): Microsoft, Intel, Alcatel- Lucent , Motorola/Freescale, IBM, Nortel, SAP, Unilever, Sony, Fuji, Toshiba, Brother, 3 Com, Boeing, British Telecom, News Corp. , Siemens, Samsung, Cisco, and HP Microsoft built its first, and Cisco built its first R&D facility, outside of the US in Israel Motorola/Freescale’s Israel facility is the company’s largest development center in the world Intel has established few fabrication plants and a major R&D center in Israel

Years of Strong IT Multinational Presence (*) – At Tower Semi – Israel’s only pure-play wafer fab

Incubator for Creativity "Israel has a spectacular people, great energy, unique intelligence – an ability to solve problems. They like to win … Israel is very welcome place for investment and prosperity". Christopher Galvin, former CEO, Motorola § § § § § The Pentium MMX technology was designed by Intel in Israel Motorola/Freescale’s processor (MSC 8101) was planned and developed in Israel Sun’s development center in Israel is largely responsible for the development of the international standard for Java data security Amdocs is the world’s leading OSS player Comverse is the world’s leader in voicemail messaging systems Check Point Software is a leader in VPN and Firewall markets 60% of cordless phones chips were designed by DSPG When you read a magazine, the chances are high that the color printing is using a system originally developed by Scitex The odds are that most telephone calls in China go to an ECI Telecom DCME system to route the call AVX Israel developed the world’s smallest “on board” fuse for FSL hard disk drives

Continuous IT Investments "Israel is the second Silicon Valley, and it is therefore the only other place we have chosen to expand our activities. " Michael Moritz, Sequoia Capital General Partner, March 2001 § Vibrant local investment community - Angels, Incubators and Venture Capital § Increasing involvement of international rand name VCs and Corporate Venture - IBM & Sequoia Capital chose Israel for their first VC investments outside the US. Many funds followed § Around $1. 2 B invested in 2007 – more then half into over 160 IT companies* (*) Source - Pw. C Money. Tree Report

IT is The Driving Force in Israel’s High Tech Industry Israeli Equity Investment Allocation by Industry Sector

About Axcess. Net § Primary facilitator of cross-border strategic business development (BD) transactions between Israeli companies and US IT concerns for over 15 years § Works with early stage technology companies to identify potential strategic partners and develop consequential transactions with a small number of critical partners § Completed numerous transactions: § § § Technology and product licensing (OEMs) Investment and financing Merger and acquisition (M&A) (*) All securities related activity is handled by Axcess. Net LLC, a registered broker-dealer, member FINRA and SIPC