Source: Book – Start-Up Nation – The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer
“We will trust your judgment, Dov. Do whatever you must do.” That was the message of Intel’s management gave to Dov Frohman, days after the January 1991 start of the Gulf War.
Dov Frohman made his mark by inventing a new kind of reprogrammable memory chip for Intel. However, Dov Frohman returned to Israel after leaving Intel, where he had a revolutionary idea for the local economy: he wanted Israel to become a leader in the chip design industry.
By 1973, Intel was facing an acute shortage of engineers. Frohman returned to Intel, pitched the idea of an Israeli design center. After Yom Kippur War, the Intel team arrived in Israel in April 1974 and quickly hired five engineers for its new design center in Haifa.
The Israel team began with an investment of $300,000 and five full-time employees. But it would become Israel’s largest private employer, with fifty-four hundred workers, by the nation’s thirtieth anniversary.
Intel Israel was responsible for designing the chip in the first IBM personal computers, the first Pentium chips, and a new architecture that analysts agree saved Intel from a downward spiral during the 1990s.
In the southern Israeli town of Qiryat Gat, Intel built a $3.5 billion plant where Israelis designed chips with transistors so small that thirty million of them can fit on the head of a pin.
In 1985, IBM had acquiesced to Intel’s request to become the sole manufacturer of the chip that would power most of the world’s new desktops. This would maximize Intel’s profits, but also its risk. What if Intel could not ramp up its manufacturing capability in time? And the bigger risk was the decision made by Intel’s management in Santa Clara to center much of this new responsibility in Israel. The main burden fell on Intel’s Israeli chip plant in Jerusalem, which produced about three-quarters of Intel’s global output by running two twelve hour shifts, seven days a week.
Then came the Gulf War. Iraq invaded Kuwait in August 1990.
With Gulf war, the chip output was under threat. Saddam Hussein had declared that if the United States launched an offensive, he would respond with missile strikes against Israel. Iraq had Scud missiles that could reach Tel Aviv in under ten minutes, and those missiles might be armed with chemical warheads.
In October 1990, the Israeli government ordered the largest distribution of gas masks anywhere since World War II. It was a surreal time in Israel. In kindergartens, teachers showed five-year olds how to put on their gas masks in case of attack, and everyone practiced rushing to specially prepared “sealed rooms” if the sirens went off.
In early January 1991, U.S. and European commercial airlines suspended or curtailed their flights to the region. On January 11, four days before the United Nation’s deadline for Iraq to withdraw from Kuwait, the U.S. government advised its nationals to leave Israel. On January 16, the Israeli government announced that all schools and businesses, except for certain essential enterprises (the electric utility, for example), must close for the week and maybe longer. The government wanted people at home, off the roads, and poised to hop into their sealed rooms at the sound of air-raid sirens.
For Frohman, compliance with the government’s directive would mean suspending the production of Intel’s 386 microchip at a critical moment for the company.
But Frohman had another—surprisingly far greater—concern: The key stumbling block to further investment in Israel was the lingering impression of geopolitical instability in the region. If Intel couldn’t operate in an emergency situation, then any confidence that multinationals, investors, or the markets had in Israel’s stability would instantly crumble.
On January 17, Frohman informed his employees of his unilateral decision to keep Intel Israel open during the war, in defiance of government orders, but on a voluntary basis: no worker would be punished for not showing up.
At 2:00 a.m. on January 18, Frohman, like most Israelis, was awoken by air raid sirens. He and his family quickly put on their gas masks and sealed themselves into their home’s safe room. When the all clear sounded, they learned that eight missiles had struck Tel Aviv and Haifa—near Intel’s main R&D facility—but they had not been armed with chemical warheads. More missiles were expected in the days ahead.
At 3:30 a.m., when Frohman arrived at the plant with his gas mask, he went straight to the clean room—the heart of the chip factory, where, to maintain a dust-free environment, technicians worked in sealed suits that made them look like astronauts. Work there had already resumed. He was told that when the sirens had sounded earlier, the employees had gone to a sealed room in the plant, but after quick calls home, they had returned to their work stations.
When the first postattack morning shift began, Frohman expected to see—best-case scenario—half of the shift; 75 percent showed up. Following a second Iraqi missile attack the next night, turnout at Intel’s Haifa design center increased to 80 percent. The more brazen the attacks, the larger the turnout. Welcome to Israel’s “new normal.”
The executives in Intel’s Santa Clara headquarters could not get their heads around this. During a conference call with Santa Clara two days later, air-raid sirens went off again. The Israeli team members asked for a moment to relocate, put on their gas masks, and continued the call from their sealed room. A group of Intel workers even set up a wartime kindergarten on the premises, since schools were still closed and if employees wanted to be part of Frohman’s defiant mission, they had no choice but to bring their children to work. On top of their regular jobs, the workers volunteered to serve shifts on kindergarten duty.
The legacy of Frohman’s commitment is still seen in the decisions of new multinational companies to set up critical operations in Israel. The explanation for this is more than just engineering talent in Israel. It is also a matter of less tangible factors, such as a drive to succeed that is both personal and national.