Israel is a startup nation of young, dynamic entrepreneurs. Their companies sell for hundreds of millions of dollars because they are making search engines faster and online communication more engaging. How did Israel achieve the status of “high-tech king” second only to California’s Silicon Valley?

The roots of Israel’s current high-tech industry go back to the founding of the state and its defense industry. Out of defense emerged high-tech pioneers –– icons like Dan Tolkowsky (born in 1921), who founded Elbit and Scitex; Uzia Galil (1925), who developed the first color TV at Motorola and later founded Elron; Ed Mlavsky, today in his 80s, who first linked Israeli brains to capital markets.

In Part 1 of ISRAEL21c’s Top 10 icons of Israeli high-tech, we profiled these and other pioneers. In Part 2, we look at the younger generation.

1. Dan Vilenski

Born: 1940s

Claim to fame: Brought American high-tech to Israel’s doorstop.

Vilenski helped Israel build a solid bridge between its engineering innovations to vital US capital and commercialization. Vilenski brought three major American high-tech companies to Israel: Kulicke and Soffa, a semiconductor company; KLA-Tencor for inspection and metrology tools; and Applied Materials, a company that gives the “DNA” to semiconductor products. Vilenski, the former chairman of Applied Materials Israel, has championed bilateral trade and development through organizations such as the Israel-US Binational Industrial Research and Development (BIRD) Foundation (www.birdf.com), and is a board member of the Israel National Nanotech Initiative.

2. Benny Landa

Born: 1947

Claim to fame: Forged new frontiers in the digital printing industry.

Landa was the founder, chairman and CEO of Indigo, a printing and photo technology company sold to Hewlett Packard in 2002. Indigo’s billion-plus dollars in annual revenues made HP a market leader in digital commercial printing. Today, HP Indigo presses are used for direct mail, labels, flexible packaging, folding cartons and specialty printing services.

With 500 patents to his name, Landa received the imaging industry’s top award, the Edwin H. Land Medal. Recently his nanotechnology printing company, the Rehovot-based Landa Corporation, came out of a decade in stealth mode to revolutionize the imaging scene with an eco-friendly printing process that uses water-based nanometer-sized particles to print on almost any kind of material.

3. Moshe Yanai

Born: 1948

Claim to fame: Defined an industry in data storage technology.

Moshe Yanai’s contributions to the way companies store and manage data are integral to the operation of the Fortune 500 companies and banks that work with the American data storage and backup giant EMC. He helped make EMC a multibillion-dollar company and led the creation of Symmetrix, EMC’s flagship product and quite possibly the most successful computer storage technology in the world. Companies at the World Trade Center that had used Symmetrix to back up data were the first to bounce back after 9/11. Yanai later sold a cloud computing technology he developed to IBM; then IBM bought a second company he co-founded, Diligent, for a cool $300 million.

4. Avi Naor

Born: 1948

Claim to fame: Led Israel’s Amdocs to an IPO.

A computer sciences major at the Technion-Israel Institute of Technology, in 1976 Naor joined the Aurec Group, and by 1982 was a member of the team that founded the Israeli company Amdocs, a publicly traded billing and CRM software company. In 1998, as CEO and president of Amdocs, he led it through its IPO on the New York Stock Exchange. Later he headed many acquisitions made by the company. In 2002, when sales reached $1.6 billion, he left to devote himself to charity work.

5. Zohar Zisapel

Born: 1949

Claim to fame: Perfected the high-tech incubator idea for telecom.

With his older brother Yehuda, Zohar Zisapel created the RAD Group, considered the world’s most successful incubator for telecoms. The company started out by manufacturing a tiny modem that pulled in $5 million in sales. Over the years, RAD has helped change life as we know it — enabling high-speed and wireless communication, and secure telephone networks and banking. Today, RAD’s 30 independent companies (five of which trade on the NASDAQ) provide communications solutions to more than 100 telecom operators around the world, including AT&T, British Telecom and Deutsche Telecom, and to the banking/financial, governmental, military, utility and transportation sectors.

6. David “Dadi” Perlmutter

Born: 1952

Claim to fame: An architect and key developer of Intel processors.

Have a Pentium Chip Inside (your computer)? Israeli electrical engineer Dadi Perlmutter led its development. At Intel, he led the team that developed the Pentium processor in the early 1990s. His innovations helped make personal computers mobile, and he developed other core processor technologies for Intel, where today he is general manager of its Mobility Group — including the Centrino brand, wireless networking and Intel Core2 Duo products.

Perlmutter came up with the idea of a NetBook, a mobile, lightweight laptop. He imagined they would be useful for schools and emerging markets, but to his surprise there was also a strong interest from mature markets. Today, 85 percent of all NetBooks (32 million of them are expected to be shipped this year) use the Intel Atom processor. He and his team are working on a new platform to replace the Atom. Codenamed Pineview, it will provide longer endurance and better performance to next-generation NetBooks.

7. Moshe Lichtman

Born: 1956

Claim to fame: Microsoft Israel’s former R&D center president.

Lichtman was promoted to a VP of Microsoft at the young age of 30. Known in Israel as one of the country’s most competitive high achievers and networkers, he helped lead Microsoft through various phases of development — starting with the Windows 95 platform to its rise as a top Web portal (MSN) in about 30 countries in North America, Europe, Asia and beyond. He started at Microsoft in 1991, and recently left for Israel Angel Investments after heading the Microsoft R&D Center in Israel for five years.

8. Dov Moran

Born: 1956

Claim to fame: Inventor of the Disk-on-Key portable memory stick.

With a bachelor’s degree from the Technion Israel Institute of Technology, Moran founded and chaired M-Systems, the company that created the first Disk-on-Key, the portable chip-based key that plugs into the USB port and allows us to copy, save and rewrite data. M-Systems was sold to SanDisk for $1.6 billion in 2006.

Moran also tried ambitiously to create the world’s smallest cell phone, with inter-changeable jackets, called the modu. The company lost relevance with the iPhone takeover in the market, and the patents for modu sold to Google for $4.9 million. Moran now chairs Tower Semiconductors and Biomas, a biotech company. This year he released a “smart TV” set-top box, Comigo, which allows users to see and interact with TV across all modes of devices.

9. Gil Shwed

Born: 1967

Claim to fame: Inventor of the modern corporate firewall.

Nicknamed “Gil Bates” (a play on “Bill Gates”) for his place on Forbes magazine’s list of youngest billionaires, Shwed is the founder and past CEO of Check Point Software Technologies. Although the business has seen better times, this Israeli company defined an industry thanks to Shwed, who invented the concept of the modern firewall to protect computers and systems from hackers. Like many of Israel’s younger entrepreneurs, his first experience in high-tech was in the army: Shwed was a member of 8200, a super-secret electronic intelligence unit of the Israel Defense Forces.

10. Yair Goldfinger

Born: 1970

Claim to fame: Co-founder of ICQ, the world’s first Internet messaging system.

Goldfinger, along with Arik Vardi (son of Yossi), Sefi Vigiser and Amnon Amir, founded Mirabilis and its flagship product, the ICQ instant messaging program sold to America Online for $407 million in 1998. ICQ revolutionized online communication.

Goldfinger’s newer startup, online display advertising company Dotomi, was recently sold to ValueClick for $295 million. He’s also involved in companies such as PicScout (bought by Getty Images for $20 million), PicApp (bought by Ybrant for $1 million, and Jajah (sold to Telefonica for $207 million).