Israel-Palestine conflict damages high-tech supply chains: RMIT expert

The ongoing Israel-Palestine conflict has impacted global supply chains, wrote Dr. Nguyen Manh Hung, a logistics and supply chain expert at RMIT University Vietnam.

Israeli-Vietnamese relations are expanding in agriculture, commerce, science and technology, and notably, in the defence sphere, where Vietnam is considered "an emerging partner in Israel's 'Asia Pivot' policy", as reported by Israeli thinktank Begin-Sadat Center for Strategic Studies.

The relationship reached a milestone in July 2023 when the two countries signed the Vietnam-Israel Free Trade Agreement (VIFTA) in Tel Aviv in the presence of Vietnam's Deputy Prime Minister Tran Luu Quang and Israeli Prime Minister Benjamin Netanyahu.

The deal offers the two countries opportunities to exchange products, services, and technological expertise. Trade between the two countries reached $2.3 billion in 2022 and is expected to reach $3 billion after the VIFTA is implemented, Reuters reported.

The agricultural and high-tech supply chains have played significant roles in elevating these trade developments. Vietnam mainly benefits from exports (totalling $785.7 million in 2022) of phones and components, seafood, cashew nuts, and coffee to Israel. On the other side, Vietnam imports high-tech equipment, electronic products and components, machinery, equipment and spare parts, and fertilizers from Israel (totalling $1.4 billion in 2022).

Vietnam is looking to Israel for strategic developments in military supplies and semiconductor expertise. Israel has been a serious player in major semiconductor supply chains, a small country with an outsized influence on the global chip industry. As reported by Bloomberg, Israel is a significant “source of engineering talent, a hub for international chipmakers, and fertile ground for semiconductor startups the big companies often want to acquire.”

The ongoing Israel-Palestine conflict could seriously affect these supply chains, especially the demand side and the technological expertise flows. Developing resilient and adaptive supply chains has become critical for trade development in this disrupted environment. Recent research urges industries to be proactive in their supply chain management and digitalisation of their operations to stay updated.

Supply chain professionals and associations should stay informed in these uncertain times by contacting trusted sources for the latest and most dependable security updates. Development of specific and robust scenario planning as well as consolidating reliable supply sources can also enhance resilience and agility in trade operations.

These strategic measures are essential in ensuring a smoother flow of goods across borders, fortifying the global trade ecosystem against potential future conflicts. Although physical flows of products and services might be threatened due to these disruptions, technological and expert cooperation can still work.