Israel's High-Tech Sector Achieves Record Growth Amidst War

Despite facing a complex period of prolonged war across seven fronts, geopolitical uncertainty, and global economic pressures over the past two years, Israel's high-tech industry has demonstrated remarkable resilience and strength. The sector, supported by determined government policy, has not only survived but thrived, setting unprecedented records and solidifying its position as a strategic technological and scientific engine for the Western world.

Official data reveals a national success story: in 2025, Israeli high-tech exports reached an all-time high of approximately $85 billion, accounting for 58% of total Israeli exports. High-tech output surged to 352 billion shekels, representing 18.3% of the GDP, and the sector contributed about 50% to Israel's overall economic growth. Companies raised around $15 billion in funding, a significant 30% increase from 2024, while exit deals reached approximately $84 billion. The industry now employs nearly 400,000 workers.

International confidence is evident in major deals, including Google's $32 billion acquisition of Israeli company Wiz in March 2025, the largest in Israeli high-tech history, and CyberArk's approximately $25 billion deal with Palo Alto Networks. These transactions underscore Israel's standing as a leader in cybersecurity and identity protection in the AI era.

Beyond these deals, approximately 1,500 Deep Tech companies are active in Israel, focusing on AI, chips, quantum computing, robotics, life sciences, and defense technologies. These firms raised over $28 billion between 2019 and 2025, positioning Israel as a leading global Deep Tech hub outside the United States.

The industry is shifting from a "Startup Nation" model to an "R&D Nation" model, emphasizing the retention of intellectual property, engineers, and research and development centers within Israel after acquisitions. The sale of RealSense to Cognex for over $600 million, which kept its development center in Haifa as Cognex's global R&D hub for computer vision and robotics, exemplifies this new strategy. Over 400 multinational R&D centers from global giants like Intel, Google, Microsoft, and Apple operate in Israel, highlighting its indispensable role in global technology research and development.

While celebrating these achievements, a sober assessment indicates the need for continued active government involvement. Data from March 2026 shows that only about 62% of employees in private Israeli tech companies were employed in Israel, a decrease from 69% in 2019, alongside a slight drop in local R&D workers. This trend signals a call to action for the government to maintain proactive policies ensuring that technology developed in Israel remains a strategic national asset.

To solidify Israel's position as a global R&D powerhouse in the coming decade, the government, industry, and academia must collaborate on a national strategy. Key recommendations include setting a strategic national goal to be a world leader in Deep Tech and AI, creating incentives for retaining knowledge and IP in Israel, investing in advanced research infrastructure, promoting geographic diversification of innovation hubs, and establishing an integrated national R&D headquarters to streamline regulation and foster rapid experimentation.