Israel risks falling behind in AI despite growth

Habana Labs. Mobileye. Hailo. Wix. There are more than 1,150 AI-focused startups in Israel, and that number is growing. Even so, some people within the government are concerned that the nation risks falling behind because it lacks a unified AI policy.

AI policy refers to national strategies like the U.S.’s American AI Initiative and Canada’s Pan-Canadian Artificial Intelligence Strategy, which implement whole-government efforts to promote technological innovation. Implicitly, it incorporates a funding component that bolsters those efforts with capital.

“AI is affecting every element of our society, and it’ll continue to affect change further and further. Those [who don’t adopt it] might find themselves [behind],” Aharon Aharon, CEO of the Israel Innovation Authority, the arm charged with fostering industrial R&D within the state, told members of the press during a roundtable discussion at the Jerusalem Press Club last week. “Just [funding] and capital is not enough. You need companies that grow … so they can invest back, and so they can continue to develop the Israeli economy.”

In its annual industry trends report published last year, the Innovation Authority noted that the global competition for AI could be a lever for the expansion of Israel’s startup ecosystem into other areas, but that the state had yet to close the gap with other countries that have invested substantially in “AI infrastructures.” The latest Government AI Readiness Index published by consultancy Oxford Insights, which attempts to quantify the preparedness of 194 countries and territories to use AI in the delivery of public services, ranked Israel in 21st place, behind China (20th), Italy (15th), New Zealand (13th), France (8th), the U.S. (4th), and Singapore (1st).

One factor is the number of countries that have outstripped Israel with the funding they’ve set aside for AI research. For instance:

• The Pan-Canadian Artificial Intelligence Strategy is a five-year, $94 million plan to invest in AI research and talent, complementing the government’s investments of nearly $173 million and $45 million in Scale.AI, a business-led consortium that expects to create close to 16,000 jobs.
• The EU Commission committed to increasing investment in AI from $565 million in 2017 to $1.69 billion by the end of 2020.
• France recently took the wraps off a $1.69 billion initiative aimed at transforming the country into a “global leader” in AI research and training.
• South Korea has a multiyear, $1.95 billion effort to strengthen its R&D in AI, with the goal of establishing six AI-focused graduate schools by 2022 and training 5,000 AI specialists.

Last November, in something of a stimulus, the Innovation Authority announced a program that will see the Israeli government cover the cost of AI education. It’ll sponsor consortiums of five or more companies who will collaborate to train their own employees, with accepted proposals receiving up to two-thirds of the costs or approximately $570,000 per year over three years.

One of the program’s goals is to close Israel’s growing talent gap, which stands at an estimated 2,000 AI specialists. The Innovation Authority previously pegged the total shortage of skilled workers at about 15,000.

Another effort underway touches on Israel’s digital medical records, which are stored in databases organized by local health medical maintenance organizations. Last year, the government announced a $264 million plan to combine the millions of records into a unified system, which will put patients’ information in a format conducive to AI and data analytics programs.

That’s not to say there isn’t activity. In 2018, AI-related companies accounted for 17% of the 6,673 tech companies in the country and 37% of total capital raised ($2.25 billion). Beyond startups, tech giants like Apple and Facebook established labs to tap the region’s AI talent. Intel set up a new Center for Artificial Intelligence with the Technion Israel Institute of Technology in Haifa, and shortly after, Nvidia opened an AI-based R&D center in Israel.

But without an AI policy, there’s no guarantee growth will continue.

“[W]e must acknowledge the fact that we are already falling behind in the race for AI-based technological dominance … If appropriate resources are not allocated, and if we do not develop suitable tools to advance Israeli leadership in AI-based technologies, we risk lagging [further] behind,” wrote the Innovation Authority in its 2019 report, noting that AI technologies are expected to add $15 trillion to the global economy by 2030 as the market grows to $191 billion in worth by 2025. “Accordingly, we are calling for the consolidation of all sectors – government, academia, and industry – to establish a vision and a strategy on AI for the Israeli economy.”