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A Hi-Tech Veteran With a Mission

Posted By Nicky Blackburn On December 22, 2003 @ 12:00 am In | No Comments

“We have to work very hard to develop a society with high standards of justice and morality, and a high quality of economy, education, and science,” says Eli Ayalon, a business leader with an idealogical mssion.For hi-tech veteran, Eli Ayalon, his immigration and early days in the new state of Israel were a life-defining experience.

In 1952, at the age of nine, he arrived in the four-year-old Jewish state from Egypt where his father had been working on business. Among his new neighbors in Lod, where the family settled, were Jews who had survived Auschwitz and other horrors of the Holocaust. The experience left him with a lasting belief that Israeli citizens must do whatever it takes in order to maintain the independence of the State of Israel. “We can’t count on anyone but ourselves,” says Ayalon, a wiry and energetic man. “We have to stick to this country we have here, and never lose it again.”

For Ayalon, now 60 and the chairman and CEO of successful semiconductor company, the DSP Group, this belief translates into a most unusual type of activism, a kind of high-tech Zionism, where Ayalon harnesses the power of the high-tech industry to help transform Israel into a stronger and better nation, either through example, or through work in the community.

“We have to work very hard to develop a society with high standards of justice and morality, and a high quality of economy, education, and science,” says Ayalon. “My children take the State of Israel for granted because they were born into it, but I understand how strange it is. If we do not act in a wise way we may lose it, either through dangers from the outside, or from the inside.”

Ayalon was born in Sudan in 1943. His parents, whose sir-name was Lanciano, were Italian by birth, but lived and worked in the Sudan. Shortly after Ayalon was born, the family moved to Egypt. At the end of the Second World War, Ayalon’s father was arrested by the British because he was Italian. He was sent to a prisoner of war camp with other Italians and Germans, despite the fact that he was Jewish. He spent three months in the camp and was only finally released when the Rabbi of Cairo intervened.

The family moved to Israel in 1952 and Ayalon’s father opened up a small shop where he managed to eke out a living for his four children. “We were poor, like all the immigrants at that time, but I remember those days as the best of my life,” says Ayalon. “There was no materialism, just the hope that we were building something huge.”

Ayalon won a scholarship to a vocational school in Tel Aviv where he studied mechanics, fine mechanics, and electronics. He then attended the Technion Institute of Technology in Haifa, where his studies were sponsored by the Israel Defense Force. He left the Technion as an engineer in 1968 and joined the Israel Navy where he served as an officer in advanced weapons systems and electronics until 1976.

His first civilian job was as the manager of R&D in the nuclear medicine department of Elscint. Ayalon spent 11 years at Elscint during which time he moved from one discipline to another, gaining experience in virtually every field of management, from R&D, to sales and marketing, manufacturing, and general management. At the end of this period, he felt he was ready to take on the role of general manager.

His first post as CEO was at Teledata, a Nasdaq traded company that specialized in products for connecting public telephone exchanges to a user’s home. Teledata was sold in 1998 to US company ADC at a company value of $200m. Over the next few years, Ayalon worked as CEO for a number of companies, before finally taking the post as CEO of DSPG in 1996. At that time DSPG was a relatively small company specializing in chips for telephone answering devices. In the intervening years, DSPG has grown dramatically, and today its chips are used in a vast spectrum of short range communication devices with added video, voice, bluetooth and data technologies added. In November last year, DSPG spun off its IP licensing division to create a new company, ParthusCeva. The two companies have a combined turnover of about $200m., while DSPG’s market capitalisation stands at about $673.67m.
Last year, one of the hardest years of the recession so far, DSPG saw revenues grow by 40%. As a reward, DSPG — which is traded on Nasdaq – gave employees six extra salaries. This year, anticipated growth is 20%, and analysts predict that by the end of this year, the company’s revenues will reach $150m., of which some 15% will be net profit, making it one of the strongest players on Nasdaq in terms of profit per employee.

As head of one of Israel’s larger hi-tech companies, Ayalon believes that it is his duty to find ways to help Israeli society. The company is therefore involved in many community projects to try to improve life for poorer segments of the population. DSPG, for instance, finances and operates a number of after-school youth clubs in poor neighborhoods of Lod, Ramle, Herzliya, and Jerusalem. At these clubs children from poorer families receive a hot meal, and additional tuition from teachers who help them with their homework. Employees from DSPG often go the clubs to teach the children how to operate computers. The company also sponsors five Ethiopian students through university. Once the students have completed their studies, they will join DSPG as engineers.

“The strength of Israel lies not only in tanks and airplanes, but also in how the different layers of society feel. We can’t expect people who can’t feed their children to be ready to sacrifice their lives for the country,” says Ayalon, who teaches Jewish history at two local schools in the north once a month on a voluntary basis. “If we face a difficult economic situation all of us have to do whatever we can in order to help solve it. It’s not enough to cry.”

Ayalon, who is head of the Herzliya Research Group, an economic think tank which reports to the annual Herzliya Conference, believes that education is the real key to Israel’s future prosperity. “The only limit to the potential of the hi-tech industry in Israel, is the number of engineers graduating from university,” he asserts. Research carried out by the Herzliya Group last year, showed that if Israel produced 2,000 more engineers every year, in seven years Israel’s balance of trade would become positive.
Ayalon also believes that Israel’s 60,000 hi-tech workers have much to offer the Israeli community in all walks of life. “The only sector exposed to the West consistently is the hi-tech industry, and it can play a significant role in improving service quality and management in every sector of Israeli life,” Ayalon continues. “Because high-tech companies sell abroad, and behave and act in a free economic environment, they must give excellent service at the right time and the right cost, or they will not succeed. People working in this industry are processing international management and service values every day. This could become a very good nucleus in the formation of a new Israeli society and culture.”

To achieve this, Ayalon is urging hi-tech leaders to become more involved in the community. “It’s not enough for us to run our companies and be successful, we have to disseminate the hi-tech culture to the general public,” he says.

In mid-December Ayalon was set to give a lecture on the high-tech industry to the prestigious Herzliya Conference. One of the topics he intends to raise is how remote the high-tech industry has become from the rest of the Israeli population. “The hi-tech industry is viewed by the public and the media as a closed circuit of people who worry only about their own well-being,” Ayalon explains. “That’s not right. Given the power of Israel’s hi-tech industry, which brings in 50% of Israel’s exports, one could expect the managers of this industry to be the most influential people in the country, but we are not. We have to be more involved in the community to gain this influence.”

On the wall behind Ayalon’s desk is a picture of Israel’s former prime minister, David Ben Gurion. The picture holds pride of place on the wall and Ayalon, who is secular, admits that he believes Ben Gurion was Israel’s greatest prime minister. “No prime-minister after Ben-Gurion has dealt with anything except the Palestinians and the security problems,” he says. “These are very important, but we have a life to live in parallel. The prime-minister must take charge of everything, including the economy.”

He admits that the current government is making an effort to take Israel’s economy in hand, through privatization schemes, but is doing nothing to try to ease the unemployment crisis. The answer, he believes, is for the government to invest more money in infrastructure. “If you build roads and railways to the Negev, or to the north of the country, you create more jobs in the short term, but also shorten the distance between the peripheral areas of Israel and the center of the country, close the gap between social layers, and reinforce our national unity,” he says.

Despite many criticisms of the Israeli government, and Israeli life, however, Ayalon is still an optimist at heart. “Things are not being done that should be done, but if I look at the situation today compared to how it was when I came to the country in ’52, we have achieved a great deal. We have a population of five million Jews, a strong defense force, good technologies, and a fantastic democracy in a region that does not understand the meaning of the word. We have created our own culture in a language that was not spoken for 2,000 years.”

Ayalon relaxes for a moment in his chair. “I realised a long time ago how lucky I was to be born when I was born and not 10 years earlier,” he says thoughtfully. “If I had been born earlier, I could have ended up among the 1.5 million Jewish children that vanished in the Holocaust. I think the generations that came afterwards should do whatever they can to give to the State of Israel, and not expect it to give to us. Israel has to succeed, not just militarily, but also morally.

I view my activity in hi-tech as part of that giving. I see it as part of the huge renaissance of the Jewish nation.”



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