In a move reflecting the challenges facing the Israeli economy amidst the ongoing conflict, Samsung Next has announced the closure of its operations in Israel, opting to shift its focus abroad. The decision, communicated to staff in an email, marks a significant shift for the innovation arm of the South Korean conglomerate.
The closure of its Tel Aviv operations, situated in a key regional tech hub, comes after nearly a decade of operation in Israel. Despite the difficulties, the company highlighted its accomplishments, including investments in 70 local companies and startups, according to reports from Israeli tech publication CTech.
The transition will see the company’s US office take over regional clients and investments, with the process expected to be completed by autumn. The email assured employees that the US office would provide resources and guidance during this period of change.
The decision arrives amid broader economic challenges for Israel, particularly in the wake of the recent conflict with Gaza. The economy has faced significant headwinds, with the tech sector also feeling the impact. The Boycott, Divestment, Sanctions (BDS) movement, advocating for an embargo on Israel over human rights concerns, seized upon Samsung Next’s move as a sign of diminishing confidence in the Israeli economy.
Prior to the conflict, concerns were raised about controversial judicial reforms and their potential negative effects on economic growth. With the onset of hostilities, warnings about economic contraction grew more pronounced. In the last quarter of 2023, the Israeli economy contracted by nearly 20 percent in annualized terms.
Efforts to mitigate the economic fallout have included the Central Bank’s decision to cut interest rates in January, aimed at supporting businesses and households during the conflict. While some indicators have shown improvement, credit ratings agency Fitch Ratings maintained a negative outlook on Israel, citing uncertainties surrounding fiscal trajectory and the duration and intensity of the conflict, including the risk of regional escalation.
The impact of the conflict extends beyond the business sector, with Israel’s tourism industry also feeling the strain. As the nation grapples with both economic and geopolitical challenges, the closure of Samsung Next’s operations in Israel underscores the broader repercussions of ongoing regional tensions on the country’s economic landscape.
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