Israel's Tech Sector Surges Amidst Conflict, Shifting to R&D Focus

Despite facing a complex and challenging period marked by prolonged conflict, geopolitical uncertainty, and global economic pressures over the past two years, Israel's high-tech sector has not only persevered but achieved record-breaking results. Bolstered by decisive government policies, the sector has returned to rapid growth, solidifying its position as a global technology and scientific hub for the Western world. Official figures from the Israel Innovation Authority and government ministries reveal a remarkable success story. In 2025, Israeli high-tech exports reached an unprecedented $85 billion, accounting for approximately 58% of the country's total exports. The sector's output grew to 352 billion shekels, representing 18.3% of the GDP, and contributed about half of Israel's overall economic growth. Israeli companies successfully raised nearly $15 billion in funding, a significant 30% increase from 2024, while exit deals (acquisitions and sales) reached approximately $84 billion. The sector now employs nearly 400,000 workers.

The resilience of Israel's innovation engine amidst war and security threats is evident. Major international investments underscore this strength. In March 2025, Google acquired the Israeli company Wiz for $32 billion, the largest deal in the history of Israel's high-tech sector. Palo Alto Networks and CyberArk also completed a significant deal valued at nearly $25 billion, reinforcing Israel's status as a leader in cybersecurity and digital identity in the AI era.

Beyond these large transactions, approximately 1,500 Israeli companies are actively engaged in deep-tech fields such as artificial intelligence, semiconductors, quantum computing, robotics, life sciences, and defense technologies. These companies have raised over $28 billion between 2019 and 2025, establishing Israel as a leading global deep-tech center outside the United States.

Historically known as the "Startup Nation," Israel's tech model is evolving. The previous focus on founding, funding, and selling companies is shifting towards a new vision that emphasizes retaining talent, intellectual property, engineers, and R&D centers within Israel after acquisitions. This is driven by a shared vision among industry, academia, and government. The acquisition of RealSense by Cognex in 2026 for over $600 million exemplifies this new model. RealSense, which is expected to grow revenues by over 50% in 2026, will maintain its development center in Haifa, which will become Cognex's global R&D hub for computer vision and robotics. This approach ensures that expertise and capital remain rooted in Israel, fostering deeper growth.