SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
                                            November 29, 2005

VIA EDGAR
---------

Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, DC  20549-0303

Attention:  Stephen Krikorian,
            Accounting Branch Chief
            -----------------------

            RE:   Elron Electronic Industries Ltd.
                  Form 20-F for the year ended December 31, 2004
                  Filed July 13, 2005
                  File No. 000-11456

Dear Ladies and Gentlemen:

            On behalf of Elron Electronic Industries Ltd. ("Elron" or the
"Company"), we provide Elron's responses to the comment letter dated September
29, 2005, received from the staff (the "Staff") of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission") on October
26, 2005, relating to Elron's Form 20-F for the year ended December 31, 2004.

            For your convenience, the Staff's comments have been restated below
in their entirety, with the responses to a particular comment set out
immediately under the comment or comments.

General
-------

1.    Comment: We note that Elron Electronics Industries Ltd. ("Elron") received
      an order from the Commission pursuant to Section 3(b)(2) of the Investment
      Company Act of 1940 declaring that Elron was not an investment company.
      See In re Elron Electronic Industries, Ltd., SEC Rel. No. IC-11314 (Aug.
      22, 1980) (the "3(b)(2) Order"). The 3(b)(2) Order was based upon a number
      of factual representations made by Elron as part of its application for
      that order. See In re Elron Electronic Industries, Ltd. SEC Rel No.
      1C-111273 (July 23, 1980). We further note that a number of these factual
      representations no longer appear to accurately describe Elron's present
      business. Please provide us with a written explanation that details why
      you believe that Elron is still entitled to rely upon the 3(b)(2) Order,
      and if you conclude that Elron is unable to rely upon its 3(b)(2) Order,
      please provide us with a written analysis of why you believe Elron is not
      an investment company, or is otherwise excepted or exempt from regulation
      under the Investment Company Act of 1940.

<PAGE>

Securities and Exchange Commission
Division of Corporation Finance
November 29, 2005
Page 2

Response:

      On August 22, 1980, Elron received an order from the Commission pursuant
to Section 3(b)(2) of the Investment Company Act of 1940 (the "Act") declaring
Elron to be primarily engaged in a business or businesses other than that of
investing, reinvesting, owning, holding or trading in securities (the "Order").
The application for the Order was based upon a number of factual representations
by Elron, which are summarized in paragraphs (a)-(d) below. Also set forth below
each representation is current information regarding Elron and its group of
companies. As shown below, Elron's development of technology products through
controlled entities is consistent with the business activities presented to the
Commission in Elron's application for the Order. Accordingly, Elron believes
that it is entitled to continue to rely on the Order.

      As required by Section 3(b)(2) of the Act and the Order, Elron is
primarily engaged in a business other than that of investing, reinvesting,
owning, holding or trading in securities either directly or through (i)
majority-owned subsidiaries or (ii) controlled companies (as defined in the
Act). Elron continues to conduct its operations primarily by acquiring
controlling interests in new and existing controlled technology companies in its
main areas of operation, in different stages of their life cycle, including
early stage and more mature companies. Due to the very nature of the business in
which Elron and its controlled companies operate - the Israeli high technology
business - the technologies, products and companies in Elron's group evolve
rapidly in response to new developments, intense competition and market demands.
Accordingly, over any given period of time, the companies that comprise Elron's
group may change and the number of such companies may increase or decrease.
However, although the companies in Elron's group have changed since Elron
received the Order, Elron's business strategy remains substantially unchanged
since receiving the Order.

a. Elron is primarily engaged in the utilization of computer based and
electronic sciences to develop, manufacture and sell high technology products
through controlled companies.

      Founded in 1962, Elron has been a major force in the development of the
Israeli high technology industry by building Israeli and Israel-related
technology companies. Elron is a high technology operational holding company
that operates primarily through controlled companies in similar lines of
business.

      Elron's business strategy has always been, and continues to be, to
identify emerging technologies and potential technology leaders, and to create
and build Israeli technology companies with global potential. Elron implements
its strategy by taking an active role in the development and growth of its group
companies and by using its wealth of management

<PAGE>

Securities and Exchange Commission
Division of Corporation Finance
November 29, 2005
Page 3

experience and financial resources to further their development. Accordingly,
Elron has built technology companies in the fields of advanced electronics,
medical devices, communications, semiconductors, software products and services
and advanced materials over a period of many years. Elron's ownership interests
in its group companies are held directly and/or through its majority owned
subsidiary, RDC-Rafael Development Corporation Ltd. ("RDC"), or Elron's wholly
owned subsidiaries, Elbit Ltd. and DEP Technology Holdings Ltd. ("DEP"). Most of
Elron's group companies were established together with entrepreneurs or started
as activities within Elron, which were subsequently spun-off. In addition, some
of Elron's group companies originated within RDC. RDC was established in 1993 by
Elron and Rafael, the largest research and development organization of Israel's
Ministry of Defense, for the purposes of identifying and exploiting Rafael's
technology in non-military markets. Elron also invests directly in some of the
companies held by RDC, namely Given Imaging Ltd., Galil Medical Ltd.,
Semiconductor Engineering Laboratories Ltd. ("SELA"), 3DV Systems Ltd. and
Starling Advanced Communications Ltd., all of which are controlled directly by
Elron or indirectly by Elron through Elron's control of RDC.

b. Elron's investment in the stock of, and loans and advances to, controlled
companies represents 95% of its total assets, exclusive of Israel government
securities. Virtually all of Elron's income will be derived from controlled
companies.

      As part of its business structure, Elron holds interests in publicly and
privately owned companies, as it did at the time of the application for the
Order. Elron's control of its group companies is primarily derived from its
beneficial share ownership in excess of 25% of its group companies, as set forth
in Exhibit A hereto. At the time of the application for the Order, Elron's
ownership of controlled companies represented 95% of Elron's total assets,
exclusive of Israel government securities. Currently, Elron's ownership of
controlled companies represents approximately 90% of Elron's total assets,
excluding total cash (i.e. cash, U.S. government securities and short term bank
deposits). For the year ended December 31, 2004, approximately 90% of Elron's
income was derived from Elron's controlled companies. Most of this income
derived from the sale of Elron's controlling interest in Elbit Systems Ltd.

      Aside from its ownership of controlled companies, Elron's assets are
comprised of cash, U.S. government securities and short term bank deposits
("Total Cash") and, to a lesser extent, securities of a small number of
non-controlled companies in the high technology field. Most of the Total Cash
was derived from the disposition by Elron of its holdings in two controlled
companies in 2004 and 2005, Elbit Systems Ltd. and Oren Semiconductor, Inc.,
respectively, for an aggregate of $215.2 million. An additional $93.9 million of
cash was derived from the sale, in 2005, of most of Elron's shareholdings in
Partner Communications Company Ltd., of which Elron was a founding shareholder.
During 2004 and 2005 to date, Elron continued to reinvest

<PAGE>

Securities and Exchange Commission
Division of Corporation Finance
November 29, 2005
Page 4

the proceeds of these dispositions primarily in new or existing controlled
companies. Elron has invested an aggregate of approximately $100 million in
controlled companies, which represented approximately 91% of Elron's total
investments in its group companies, during 2004 and 2005 to date. In addition,
in the third quarter of 2005, Elron distributed a cash dividend of approximately
$88.5 million to Elron's shareholders. Elron's remaining cash has primarily been
invested in U.S. government securities and short term bank deposits until such
funds can be reinvested in existing or new controlled companies. It is Elron's
intention to deploy its available cash resources in activities consistent with
Elron's past practices and its business strategy as described herein.

      In addition to its share ownership, Elron holds board positions and
management rights, including the right to elect officers and vote shares, in
many of its controlled companies pursuant to agreements entered into with other
shareholders. One or more Elron officers always serve on the board of directors
of a group company. Often, either an Elron officer serves as chairman of the
board of directors or the chairman of the board of directors is selected by
Elron. Elron representatives also serve as members of various board committees
of Elron's group companies. Elron is often involved in the selection of the
Chief Executive Officer or, from time to time, one of its officers serves as
Chief Executive Officer of its group companies on an interim basis. Elron is
actively involved in the day-to-day operations of its group companies, through
frequent contact with management of the group companies and participation in all
aspects of the group companies' businesses. Thus, even in cases in which Elron
may not be presumed by statute to control a company by virtue of its share
ownership alone, Elron is, in fact, in control of the company because of these
other indicia of control, in conjunction with its share ownership.

      Described below are Elron's key controlled companies, including the extent
of Elron's involvement in and influence over these companies:

      Given Imaging Ltd., a medical device company publicly traded on NASDAQ and
the Tel Aviv Stock Exchange ("TASE"), develops, manufactures and markets
innovative diagnostic system for visualizing the gastrointestinal tract, using
disposable miniature imaging capsules. Currently, Given Imaging comprises
approximately 33% of Elron's total assets, excluding Total Cash. Given Imaging
was established by RDC, based on the military technology developed by Rafael and
the financial and management support of Elron. Elron beneficially owns
approximately 37% of Given Imaging, representing all shares owned by Elron, RDC
and Discount Investment Corporation Ltd. ("DIC").(1) Elron's President and Chief
Executive Officer has served as

------------------

(1) Elron has entered into a voting agreement with DIC pursuant to which DIC and
Elron agreed to vote at shareholders meetings only as mutually agreed between
them and, with regard to the election of directors, DIC agreed to vote all of
its shares in favor of nominees to the board of directors of Given Imaging that
are proposed by Elron. Accordingly, Elron is deemed to beneficially own the
shares of Given Imaging held by DIC. DIC holds approximately 48% of Elron and is
Elron's largest shareholder.

<PAGE>

Securities and Exchange Commission
Division of Corporation Finance
November 29, 2005
Page 5

Chairman of Given Imaging since August 2002. In his capacity as Given Imaging's
Chairman, Elron's President and Chief Executive Officer is integrally involved
in day-to-day aspects of Given Imaging's business and has signature authority
with respect to Given Imaging. He is in frequent contact with senior management
of Given Imaging, including its Chief Executive Officer, Chief Financial
Officer, General Counsel and Vice-President, Business Development as well other
members of Given Imaging's Board of Directors. He is also a member of the
nominating and compensation committees of Given Imaging's Board, as well as the
corporate governance compliance committee. He also attends most audit committee
meetings as an active observer.

      NetVision Ltd., a provider of Internet services and solutions in Israel
that is publicly traded on the TASE, is 39% owned by Elron. The other major
shareholder of NetVision is DIC. NetVision originally started as a business unit
within Elron and was subsequently spun off by Elron into a separate company.
Elron exercises joint control over NetVision with DIC pursuant to a shareholders
agreement. Elron and DIC appoint all the directors of NetVision (other than the
two external independent directors required under Israeli law). Three officers
of Elron also serve as directors of NetVision. Elron's President and Chief
Executive Officer is in regular contact with NetVision's Chief Executive
Officer. In addition, Elron's Chief Financial Officer and Director of Finance
maintain regular contact with NetVision's Chief Financial Officer and are
members of NetVision's audit committee. Elron officers have signature authority
with respect to NetVision. Elron was instrumental in NetVision's initial public
offering in May earlier this year.

      Elron TeleSoft Ltd. and Elron Telesoft Export Ltd. (together "Elron
Telesoft"), 100% owned subsidiaries of Elron, engage in the field of revenue
assurance for the telecom market. Elron appoints all the members of Elron
TeleSoft's Board of Directors and the Chairman of the Board of Directors. Elron
officers have signature authority with respect to Elron Telesoft. Elron
management is in regular contact with Elron Telesoft's management.

      Galil Medical Ltd., which was also established by RDC based on the
military technology developed by Rafael with the financial and management
support of Elron, is a provider of minimally invasive temperature based
therapies for the treatment of benign and malignant diseases. Galil Medical is
approximately 59% beneficially owned by Elron (which includes Elron's direct
holdings and RDC's holdings). Elron and RDC appoint a majority of the directors
of Galil Medical. The Chairman of the Board of Directors of Galil was a director
of Elron until

<PAGE>

Securities and Exchange Commission
Division of Corporation Finance
November 29, 2005
Page 6

May 2005. Elron's President and Chief Executive Officer is in regular contact
with both the Chairman and Chief Executive Officer of Galil Medical. Elron's
senior management is involved in any major transaction involving Galil Medical.
Elron was instrumental in merging the urological business of Galil Medical with
the brachytherapy business of General Electric (previously Amersham Health) to
form Oncura, Inc. in July 2003. Elron officers have signature authority with
respect to Galil Medical.

      ChipX Incorporated ("ChipX"), a semiconductor company, was an internal
business unit of Elron until it was spun off into a separate company. Today,
Elron holds a 26% ownership interest, and is the largest shareholder, in the
company. Elron's President and Chief Executive Officer has served as the
chairman of ChipX's Board of Directors since