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IBM ECONOMIC

ECONOMIC AUDIT UPDATED 2026-07-18
Economic Score 8.00 /10 B IBM - BDS-1000 741
Economic 8.00

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Economic Audit: IBM

Economic Audit - International Business Machines Corporation (IBM)

Supply Chain & Sourcing Relationships

IBM’s Israeli operations function primarily as a technology supplier into Israeli government and security infrastructure rather than as a physical-goods purchaser, so this audit’s supply-chain findings center on IBM’s role as vendor rather than buyer. IBM MQ and IBM DataPower products are documented as critical infrastructure supporting the Israel Police’s classified-network messaging systems, with IBM reported to have served as the Israel Police’s primary IT vendor since 1975 1. Specific procurement instances identified include a 2014 contract (NIS 2.8 million, central computer/software licensing maintenance), a 2016 sole-supplier software maintenance exemption from tender plus a separate hardware maintenance contract, a May 2025 IBM MQ maintenance award (exemption from tender, running through December 2030), and a November 2025 IBM DataPower sole-supplier award (running through January 2031) 1. IBM is also reported to manage the central database of Israel’s Population, Immigration and Borders Authority (the PIBA/Eitan system), which stores biometric data on Palestinians 234. In 2020, IBM reportedly split a roughly $275 million Israeli Ministry of Defense (IMOD) logistics and data-center contract that included support for “combat equipment,” and a Red Hat executive told an Israeli publication the same year that “we see ourselves as partners of the IDF” 5. Red Hat Israel - a wholly-owned IBM subsidiary - is separately reported to count the Israeli military as its largest customer, supplying OpenShift-based software-defined data-center and edge-computing capability to multiple military units, primarily in the intelligence field 12. IBM has expanded this supplier relationship geographically within Israel, opening a cyber research and development center in Ashdod in November 2019 dedicated to the PIBA/Eitan project 31, and a cyber center in Be’er Sheva’s Gav-Yam high-tech park in 2018 that Who Profits describes as positioned to integrate discharged military cyber personnel into civilian technology roles 1. Since 1998, IBM has also built out its Israeli technology base through a sustained string of acquisitions of Israeli companies - Ubique (1998), XIV Ltd. (2008, ~$300–350 million), Guardium (2009, ~$225 million), Storwize (2010, ~$140 million), Worklight (2012), CSL International (2013, ~$10 million), Trusteer Ltd. (2013, IBM’s largest-ever Israel acquisition, reported between $630 million and $800 million–$1 billion), EZSource (2016), Databand.ai (2022), and Polar Security (2023, ~$60 million) - all of which were integrated as wholly-owned subsidiaries into IBM’s Israel R&D and product organization rather than held passively 678910111213141516171819. No public evidence identified of divestment or wind-down of any of these acquired entities. No public evidence identified of a produce, agricultural, or physical-goods sourcing relationship of any kind - IBM is an enterprise IT, software, hardware, and consulting company with no identified importer-of-record structure, seasonal sourcing pattern, or third-party produce sourcing arrangement tied to Israel.

Product Origin, Labeling & Regulatory Compliance

IBM does not manufacture or sell physical consumer goods subject to country-of-origin or settlement-origin labeling regimes, and No public evidence identified of settlement-origin product labeling, DEFRA-type compliance issues, or a corporate labeling policy addressing occupied-territory sourcing. The closest identified analogue to a origin/territorial-compliance question is IBM’s documented cooperation with Ariel University, an institution located in the West Bank settlement of Ariel: Who Profits documents IBM hosting a student-mentoring event at an IBM facility and participating in a further event for the university’s top students in 2019 13. No public evidence identified of renewal or discontinuation of this relationship after 2019, so its current status is unconfirmed. On a regulatory-compliance dimension closer to IBM’s actual product line, the PIBA/Eitan population-registry system IBM is reported to manage processes data on, and administers permit and movement control over, Palestinian residents of the occupied West Bank, occupied East Jerusalem, and the occupied Syrian Golan in addition to Gaza, meaning the system’s functional reach extends into the occupied territories even though IBM’s physical facilities are located within Israel proper 234.

Investment, Capital & Financial Exposure

IBM has maintained a long-standing foreign direct investment and research footprint in Israel dating to 1972, when the IBM Israel Scientific Center was established at the Technion in Haifa and subsequently grew into the Haifa Research Lab - reported to be IBM’s largest research lab outside the United States, with more than 500 staff 67. IBM Research–Israel today operates three sites - the Haifa Research Lab, a Systems and Technology Group Lab, and the Israel Software Lab in the Jerusalem Technology Park - with additional research and development presence in Tel Aviv, Herzliya, and Rehovot 67. This footprint was expanded through the Ashdod cyber center opened in November 2019 31 and the Be’er Sheva Gav-Yam cyber center opened in 2018 1. IBM has committed substantial disclosed capital to Israeli technology acquisitions, most notably the Trusteer Ltd. deal (2013), reported at $630 million by Globes and at $800 million to $1 billion by TechCrunch and other outlets, making it IBM’s largest-ever Israel acquisition 1011; other disclosed or estimated acquisition values include XIV Ltd. at roughly $300–350 million (2008) 1213, Guardium at roughly $225 million (2009) 15, Storwize at roughly $140 million (2010) 16, CSL International at roughly $10 million (2013) 919, and Polar Security at roughly $60 million (2023) 2014. On the inbound-capital side, IBM itself has no controlling parent and is a publicly traded, widely held corporation; its largest institutional shareholders as of 2025 were Vanguard (approximately 8.8–9.1%), BlackRock (approximately 8.0–8.6%), and State Street (approximately 5.9%), with institutional investors collectively holding roughly 73% of shares 21. BlackRock was separately identified by the UN Special Rapporteur’s June 2025 report as IBM’s second-largest institutional investor, in a list also naming BlackRock as a major investor in Palantir, Microsoft, Amazon, and Alphabet 422. This institutional-investor exposure has also produced divestment activity: Norway’s Storebrand divested from IBM in 2024 over human-rights concerns tied to IBM’s biometrics sales to Israel 2324, and Norway’s KLP fund excluded IBM among 16 companies in July 2021 for links to Israeli settlements in the West Bank 25; IBM was also included among 51 companies in the “Don’t Buy Into Occupation” coalition’s 2024 report, in an entry tied to the PIBA/Eitan database’s role in what the report characterizes as fragmentation of Palestinian society 2627. No public evidence identified that IBM, as a corporate treasury matter, itself holds Israeli sovereign bonds, Israel Bonds, or Israel-focused fund positions; nor is there public evidence that IBM underwrites Israeli sovereign debt, war bonds, or insurance - IBM is not a bank, asset manager, or insurer, and this category is not applicable to its business model.

Operational Presence & Market Activity

IBM Israel Ltd. and affiliated entities operate research, development, and business sites in Haifa, Tel Aviv, Herzliya, Rehovot, Givatayim, Be’er Sheva, and the Jerusalem Technology Park 367. Publicly available figures indicate more than 3,000 employees at IBM’s Israel R&D locations as of 2023, the most recent country-level employment figure identified; no updated 2024 or 2025 country-level headcount was located 37. No public evidence identified confirming Preferred Technology Enterprise (PTE) tax-residency status for any IBM Israel entity under Israel’s Encouragement of Capital Investments Law, although the general PTE regime exists and applies to comparable technology operations. No specific characterization of Israel (e.g., as a “strategic hub” or “regional anchor”) was identified in IBM’s own investor-relations or annual-report materials. IBM’s public posture toward the conflict has been active: CEO Arvind Krishna issued a company-wide message on the war in Israel on 11 October 2023 (updated 16 October 2023) 28, a markedly different public posture than IBM’s response to the invasion of Ukraine, where the company issued employee-support messaging in March 2022 and its CEO stated IBM was suspending all business in Russia 2930. In remarks reported by The Intercept in September 2024, Krishna described IBM’s approach to operating across differing national human-rights expectations by stating, “We try to operate with the principles that are encouraged by the governments of the countries we are in… What do those countries want us to do? And what is it they consider to be correct behavior?”, while also stating of weapons programs, “We will not work on offensive weapons programs. Why? I am not taking any kind of moral or ethical judgment” 5. The same reporting states IBM has worked with the Israeli military “since the 1960s” and describes sustained internal employee pressure, continuing for months after 7 October 2023, for IBM to disclose or limit its role in Israeli military-linked operations 5. Market activity in the security/defense-adjacent segment continued into 2025, with the IBM MQ maintenance contract (awarded May 2025) and IBM DataPower sole-supplier contract (awarded November 2025) both extending Israel Police vendor relationships years into the future 1.

Corporate Structure & Foundational Ties

IBM Corporation is US-headquartered, with its global headquarters remaining in Armonk, New York, and it was not founded in Israel; IBM’s Israel presence began in 1972 with the establishment of the IBM Israel Scientific Center 67. Who Profits enumerates six fully-owned Israeli subsidiaries through which IBM’s Israel operations are conducted: IBM Israel Ltd.; IBM Information Services Ltd.; IBM Global Services (Israel) Ltd.; IBM Israel Science and Technology Ltd.; I.B.M. Israel Properties Ltd.; and Red Hat Israel Ltd. 1. Red Hat Israel is itself reported to count the Israeli military as its largest customer 12. Against the rubric’s Israeli-Nexus Floor criteria: IBM was not founded in Israel; IBM’s headquarters and principal place of management are not in Israel 7; No public evidence identified confirming Israeli tax residency or PTE status for any IBM Israel entity; and IBM is not beneficially owned or controlled by Israeli capital, with its largest shareholders being the US-domiciled asset managers Vanguard, BlackRock, and State Street 21. Aggravating factors identified include the scale of IBM’s Israel R&D presence (its largest research lab outside the US, 3,000+ Israel-based employees) 367 and IBM’s apparent dominant, decades-long vendor position for Israel Police critical infrastructure since 1975 1. On governance, No public evidence identified of golden-share mechanisms or charter provisions tying IBM to Israeli state policy. On controlling principals, IBM’s 2025 proxy listed 13 director nominees, including Lead Director Alex Gorsky and committee chairs Andrew N. Liveris, Peter R. Voser, and Frederick H. Waddell 31; No public evidence identified of personal or family-office investment by CEO Arvind Krishna, the Chair, or named board members in Israeli companies, settlement enterprises, or Israeli defense firms, though a full name-by-name background review of all directors was not completed. IBM is separately named in the UN Special Rapporteur’s June 2025 report (A/HRC/59/23) as among companies “central to Israel’s surveillance apparatus and the ongoing Gaza destruction,” alongside Alphabet, Amazon, and Microsoft, with the report stating IBM “has also been responsible for training military and intelligence personnel” and for managing the PIBA biometric database 323342234.

Profit Repatriation & Economic Contribution

IBM’s SEC filings disclose revenue only at an aggregated regional level - Americas, Europe/Middle East/Africa (EMEA), and Asia Pacific - with Israel folded into the EMEA segment; FY2025 EMEA revenue was reported at $22,189 million, up 14.2% as reported, and no Israel-specific revenue, profit, or tax-contribution figure has been publicly disclosed in any filing or NGO report reviewed 3536. Consistent with IBM’s wholly-owned-subsidiary structure in Israel, profit flows from Israeli operations - including government and defense-linked contracts - run outward to the US parent, IBM Corporation in Armonk, New York, rather than toward Israeli-domiciled ownership, and no evidence of a reverse flow (Israeli capital controlling or owning IBM) was identified 17. Multiple secondary sources describe IBM as a dominant, decades-long incumbent IT vendor for core elements of Israeli state civilian and military digital infrastructure, spanning the population registry (PIBA/Eitan), the Israel Police messaging backbone (MQ/DataPower), and IDF logistics and computing centers 123. This economic relationship has continued into the post-7 October 2023 period and past both the 19 July 2024 ICJ advisory opinion and the November 2024 ICC arrest warrants: the Israel Police IBM MQ maintenance contract was awarded in May 2025 (running through December 2030) and the IBM DataPower sole-supplier contract was awarded in November 2025 (running through January 2031) 1. The UN Special Rapporteur’s June 2025 report, which itself post-dates both the ICJ advisory opinion and the ICC warrants, explicitly characterizes IBM as continuing to be central to Israel’s surveillance apparatus during the Gaza war 32334. No public evidence identified of any Israel-specific tax contribution, royalty, or dividend disclosure separate from IBM’s consolidated global reporting.

End Notes

Footnotes

  1. https://www.whoprofits.org/companies/company/7236 ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10 ↩11 ↩12 ↩13 ↩14 ↩15

  2. https://www.whoprofits.org/writable/uploads/old/uploads/2022/02/IBM-company-feature-final-1.pdf ↩ ↩2 ↩3 ↩4 ↩5

  3. https://investigate.afsc.org/company/ibm ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9

  4. https://novaramedia.com/2025/07/02/tech-giants-and-british-bank-named-in-francesca-albanese-report-on-gaza-genocide/ ↩ ↩2 ↩3 ↩4 ↩5

  5. https://theintercept.com/2024/09/04/ibm-ceo-israel-saudi-arabia-ethics/ ↩ ↩2 ↩3

  6. https://en.wikipedia.org/wiki/History_of_IBM_research_in_Israel ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  7. https://en.wikipedia.org/wiki/IBM_Israel ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9

  8. https://theettingerreport.com/ibm-acquires-its-13th-israeli-company/ ↩

  9. https://theettingerreport.com/ibm-acquires-its-12th-israeli-company/ ↩ ↩2

  10. https://en.globes.co.il/en/article-1000877370 ↩ ↩2

  11. https://techcrunch.com/2013/08/15/ibm-buys-israelus-cybersecurity-specialist-trusteer-for-few-hundred-million-dollars/ ↩ ↩2

  12. https://techcrunch.com/2008/01/03/ibm-acquires-storage-company-xiv-for-350-million/ ↩ ↩2

  13. https://www.vccafe.com/2008/01/02/lucky-number-14-ibm-acquires-israels-xiv-for-300-million/ ↩ ↩2

  14. https://www.calcalistech.com/ctechnews/article/bkr11bmws2 ↩ ↩2

  15. https://israeltrade.org.au/2009/12/23/ibm-buys-israeli-start-up-guardium-for-225-million/ ↩ ↩2

  16. https://www.crunchbase.com/acquisition/ibm-acquires-storwize - 9ab62f87 ↩ ↩2

  17. https://fortune.com/2016/06/01/ibm-zsource-digital-business/ ↩

  18. https://www.prnewswire.com/news-releases/ibm-to-acquire-ezsource-to-help-developers-modernize-mainframe-applications-for-digital-business-300277446.html ↩

  19. https://www.sec.gov/Archives/edgar/data/0000051143/000110465913058041/a13-13617_110q.htm ↩ ↩2

  20. https://www.timesofisrael.com/ibm-buys-israeli-cyber-startup-to-automate-cloud-data-protection-management/ ↩

  21. https://www.kamilfranek.com/who-owns-ibm-largest-shareholders/ ↩ ↩2

  22. https://en.wikipedia.org/wiki/List_of_companies_involved_in_the_Gaza_war ↩ ↩2

  23. https://www.biometricupdate.com/202405/ibm-loses-institutional-investor-over-biometrics-sales-to-israel ↩

  24. https://www.business-humanrights.org/en/latest-news/norway-financial-giant-storebrand-divests-from-ibm-over-human-rights-concerns/ ↩

  25. https://www.business-humanrights.org/en/latest-news/norwegian-klp-fund-excludes-16-cos-for-their-links-to-israeli-settlements-in-the-west-bank/ ↩

  26. https://dontbuyintooccupation.org/reports/dont-buy-into-occupation-report-2024/ ↩

  27. https://dontbuyintooccupation.org/wp-content/uploads/2024/11/2024_DBIO-IV_Company-list.pdf ↩

  28. https://newsroom.ibm.com/War-in-Israel-A-Message-From-Arvind-Krishna ↩

  29. https://newsroom.ibm.com/War-in-Ukraine-Supporting-IBMers ↩

  30. https://www.business-standard.com/article/international/ibm-suspends-all-business-in-russia-due-to-its-invasion-of-ukraine-ceo-122030800130_1.html ↩

  31. https://www.sec.gov/Archives/edgar/data/51143/000110465925030660/tm259427d2_defa14a.htm ↩

  32. https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/sessions-regular/session59/advance-version/a-hrc-59-23-aev.pdf ↩ ↩2

  33. https://www.aljazeera.com/news/2025/7/1/un-report-lists-companies-complicit-in-israels-genocide-who-are-they ↩ ↩2

  34. https://thearabweekly.com/un-report-sees-business-interests-helping-israel-settlements-gaza-war ↩

  35. https://www.sec.gov/Archives/edgar/data/51143/000005114325000015/ibm-20241231.htm ↩

  36. https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231_d2.htm ↩