Israeli solar energy company SolarEdge Technologies (Nasdaq: SEDG) is in talks to lease its production plant to several Israeli and foreign companies, including defense companies, a source familiar with the matter has told “Globes.” One idea that has emerged in the negotiations is the possibility of using existing production facilities to speed up supplies to Israel’s Ministry of Defense. At least one company, which serves as a contractor for Israeli defense equipment companies, is in talks to sign a memorandum of understanding with SolarEdge to lease production facilities at the factory in the Tziporit Industrial Park, near Nof HaGalil.
This factory currently produces SolarEdge’s popular Terramax solar inverter. However, the company is suffering from a decline in orders, with a continuous fall in its share price and waves of layoffs. It seems inevitable that production facilities designated for expansion will be leased out, while subleasing could help the company with cash flow during this difficult period.
SolarEdge’s new CEO Shuki Nir, was brought in, among other things, to reduce spending and examine new savings, or alternatively new sources of revenue. The company laid off 400 employees about a month ago, with the aim of reducing quarterly expenditure by $9-11 million and improving efficiency.
A key target in the industry
The Tziporit Industrial Park is set to become a key target for the defense industry in the coming years: Last week, Minister of Defense Israel Katz pledged to promote the relocation of the Reconstruction and Maintenance Center from the Tel Hashomer base near Tel Aviv to the industrial park. The Center is responsible for the maintenance and repair of combat vehicles, technological systems, and, among other things, also manufactures Merkava Mark 4 tanks.
Israel is facing a severe shortage of interceptor missiles, precision missiles, and even heavy mechanical equipment. Eyal Zamir, Director General of the Ministry of Defense, and the next IDF Chief of Staff, has initiated armament and equipment agreements with Israeli companies worth billions of shekels in the past year. He places great stress on the local defense industry and reducing reliance on imports.
The 10,000 square meter SolarEdge plant in Tziporit, called Sella 1 after the company’s late founder Guy Sella, was inaugurated in 2021 and has 500 employees. The plant manufactures solar inverters for the Israeli and US markets, and also has laboratory space for developing technologies and production processes that the company then implements in factories abroad.
Seeking subtenants
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SolarEdge is currently in the midst of an organizational upheaval. Too much inventory among customers and a decline in orders have led it to a series of streamlining measures. Last month, it laid off 400 employees, after two rounds last year. In January 2024, the company laid off 900 employees, 500 of whom were in Israel, and in July 2024, 400 employees were laid off, half of whom were in Israel.
A source close to the company said that SolarEdge is careful about every shekel that it spends. It has closed down its energy storage activity and has begun looking for subtenants for the campus that Azrieli is building for it in Glilot (just north of Tel Aviv), with an estimated construction cost of NIS 990 million. This is similar to the move by Wix, which also offered to sublease part of its campus. SolarEdge may take this step both in the center of the country and in Tziporit.
SolarEdge declined to comment on this report.
Published by Globes, Israel business news – en.globes.co.il – on February 6, 2025.
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2025-02-06 05:15:47
