Israel has been called a fertile ground for growing tech companies -- a technology hot spot where tech giants seek strategic investments.

Recent data show, however, that the amount of capital raised by Israeli high-tech companies from foreign and local investors in 2005 declined compared with the $1.46 billion raised in 2004. That may be turning around this year.

TheStreet.com spoke to a couple of technology heavy-hitters about their appetite for Israeli-made technology. They claim the long-term trend for investment remains positive.

Intel ( INTC) is probably the biggest investor in Israeli tech companies. Through its investment arm, Intel Capital, located near Tel Aviv, the chipmaker has made more than 50 investments in Israeli companies since 1997, with roughly 10 exits.

"We are a venture capital fund with a twist," says Shlomo Caine, director of Intel Capital Israel. "We look for equity investments in companies where we can find a strong strategic link to what Intel is doing, on the one hand, and where we see a good financial return on the other hand."

Intel Capital usually takes minority stakes in companies of up to 20%, and aims for technologies and services that will fit into its road map or complement existing products.

"Software applications that run best on our microprocessors would be complementary," Caine says. "We invest in successful companies, but ones that we could also have a mutual relationship with. ... Wisair, for instance, develops a chipset for ultra wide-band communications, in which we invested and helped drive their communication method to become a standard."

Exent, the firm's latest investment, develops online gaming. "We did it because their application is designed to run best on Intel computers, desktops, laptops," Caine says. "We think online gaming is a very big deal."

According to Caine, the next big thing coming from Israel is the pending IPO of Passave (which means wide band in Hebrew).

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