Israel is not known for its manufacturing industry, but nevertheless, Israeli startups in technology for what is known as the fourth industrial revolution, or Industry 4.0, have seen an upswing recently. According to a new report by Startup Nation Central, there are 230 startups in Israel currently active in this area, up from 146 in 2014.
According to the report, investment in Industry 4.0 companies in Israel grew by more than 220% within four years: from a total of $113 million in 2014 to $365 million in 2018. This represents only 5% of global investment in the field, but the report says that Israel is in third place after the US and China, and ahead of countries such as India, the UK, and Germany - all far bigger countries than Israel, with extensive industry.
The fourth industrial revolution is the latest stage in a series of radical changes in industry in modern times. The first industrial revolution, in the eighteenth century, utilized water and steam power to mechanize production processes. A hundred years later, electric power brought about a second revolution. In the late twentieth century, industry was revolutionized again by the introduction of computers. The fourth industrial revolution, dated from 2011, involves the connection of industrial plants to the Internet.
Industry 4.0 is already a fact in the developed countries, but about half the factories in Israel have not started to plan beyond "advanced production", according to a survey by the Manufacturers Association of Israel conducted last November. The survey results show that many factories in Israel do not meet international standards of competitiveness because of their technological backwardness, leading to low productivity and an inability to cope with competition and change on a global level.
While Israeli industry is behind in adopting innovation, Israeli startups in this area work mainly with overseas companies. In 2018, among the active investors in this field in Israel were 63 overseas investors and 27 Israeli investors.
The report points out that various overseas corporations have set up innovation hubs in Israel with the aim of serving as a bridge between Israel startups and industry. Volkswagen has opened an advanced industry project here; German healthcare company Merck KGaA has set up an innovation hub in cooperation with the Israel Innovation Authority; Italian energy company Enel is also participating in an Israel Innovation Authority lab; US automated production technology company Bright Machines has set up a development center in Israel working on robots for factories. Siemens has opened an innovation program in Israel connecting Israel Industry 4.0 startups with its industrial customers.
The Israeli companies are active in cybersecurity for industry, operational optimization, maintenance, supply chain, quality assurance, IoT (Internet of Things) platforms, sensors and imaging, and robotics. The report says that this field has similarities with smart and autonomous vehicles, in that in both fields Israel is proving itself as a significant source of innovation without itself having any substantial manufacturing activity in them.
All the same. Startup Nation Central analyst Yuval Engelstein says, "We don't expect that we'll see a company like Mobileye in Industry 4.0. It's more likely that we'll see many small companies, and exits in niche areas. This is a broad field, with adaptation products to the market that is different for each vertical."
Published by Globes, Israel business news - en.globes.co.il - on July 21, 2019
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