Israel’s role in the global diamond market appears to be
changing. Once a major cutting center, it is now developing a reputation as a
hub for diamond technology, and spawning some of the most innovative companies
in the business.
Fewer cases show Israel’s diamond-tech success better than
R2Net, the owner of diamond-jewelry retail website James Allen, which Signet
Jewelers bought for $328 million in September. Oded Edelman, its founder,
started out as a diamond polisher, before realizing he could use technology to
automate many of the processes involved. After a successful career trading stones,
he founded R2Net — “Rough Diamonds to Internet” — in 2007.
The company’s most famous brand is James Allen, but Signet
was mostly interested in R2Net’s technology. This includes 360-degree,
high-definition, close-up images of diamonds, an on-screen ring-sizer, and a
mobile app for trying on rings in virtual reality. “Together, we will redefine
the jewelry shopping experience,” pledged Signet CEO Virginia Drosos.
R2Net’s headquarters is in New York, but its
research-and-development (R&D) operation is in Israel, employing about 25
people, mainly in Herzliya.
While Israel’s cutting sector has waned, its diamond-tech
industry offers significant opportunities, said Dror Yehuda, president of
Yehuda Diamond Company, which has been creating diamond machinery since the
1950s.
“Everything can be automated,” said Yehuda. “From getting a
stone from the mining company, to the certified diamonds, everything can be
done by technology.”
His company operates on a smaller scale than R2Net. Yehuda’s
father, Zvi, the founder and brains behind the firm, still develops its
technology out of the basement of his Ramat Gan apartment, accompanied by two
additional R&D staff members. The company also has a small factory near the
Israel Diamond Exchange (IDE) for its rough-diamond color-detection machine,
one of its best-known products. For its latest project, a machine for spotting
High Pressure-High Temperature synthetics, the company has rented modest
manufacturing premises in Or Yehuda, a town near Tel Aviv.
OGI Systems, which launched its own color-grading device at
the recent Hong Kong show, employs 35 people in Israel in R&D and
manufacturing, though it also has operations overseas.
Perhaps Israel’s biggest diamond-tech company is Sarine Technologies,
which has all of its R&D operations in Israel. In addition to its Hod
Hasharon headquarters, it has teams in Ramat Dalton, an industrial park in the
rural north of the country. Of more than 600 Sarine employees globally, nearly
a third are based in Israel.
Ironically, Israel is no longer a huge market for selling
the technology. Sarine, which supplies equipment to cutters and polishers, only
got about 5% of its revenue from its home market in the first half of 2017,
compared with 75% from India. Indeed, some people cite Israeli diamantaires’
phobia of technology as a major reason the nation has lost market share to the
savvier Indians.
However, Israel’s prowess in actually making the technology
is widely considered the world’s best.
“We are approached nearly on a weekly basis by tech
companies looking to take the next step,” said Sarine CEO David Block.
The IDE is doing its part to expand this sector by opening a
diamond-tech innovation center; the bourse is currently waiting for a response
to its pitch for government funding.
“There’s a lot of innovation in the diamond and gemstone
industry [in Israel],” said Block.
Article from the Rapaport Magazine - October 2017. To subscribe click here.