A landmark year for Israeli hi-tech

Israeli high-tech recorded a landmark year in 2025, generating record exports and exits, even as the sector showed the first decline in research and development employees in over a decade and continued shifting activity offshore.

The figures come from the 2026 High-Tech Status Report, published on June 1 by the Israel Innovation Authority. According to the report, high-tech output grew 8.2 per cent in 2025, with capital raising up 30 per cent and exits reaching record levels.

The sector recorded $US85 billion ($131 billion) in exports, accounting for 58 per cent of all Israeli exports, alongside $US84 billion ($129 billion) in exits and nearly $US15 billion ($23 billion) in capital raised.

Israel ranked as the world’s fourth-largest hub for startup fundraising, behind San Francisco, New York and Boston, and the leading hub outside the United States. High-tech GDP totalled 352 billion shekels, lifting the sector’s share of Israel’s GDP to 18.3 per cent, up from 17.7 per cent the previous year.

Output per employee reached approximately 827,000 shekels annually, the highest in the economy. Growth in high-tech accounted for around half of Israel’s total economic expansion for the year.

Despite the strong headline figures, the report identified several structural concerns.

For the first time in over a decade, the number of R&D employees in Israel fell, with approximately 3500 fewer workers and their share of total industry employment dropping from 51 per cent to 49 per cent.

The Innovation Authority linked the shift partly to the adoption of artificial intelligence tools that accelerate development work, noting a corresponding rise in product roles.

The share of employees based in Israel within private high-tech companies declined to 62 per cent by March 2026, down from 69 per cent in 2019. Most growth in overseas employment was concentrated in the United States, across sales, support, management and R&D roles.

The share of senior executives based in Israel fell by around 9.6 per cent.

Israel Innovation Authority CEO Dror Bin said the findings showed a sector at a crossroads. “Israeli high-tech continues to demonstrate exceptional strength and resilience, while also reflecting the sector’s real challenges.”

Bin warned that the movement of activity, workforce and capital offshore could prove corrosive over time. “This may not be a trend felt overnight, but over time it could erode the relative advantage upon which the Startup Nation was built.”

Israeli Minister of Innovation, Science and Technology Gila Gamliel said innovation remained a national asset. “Israeli innovation is not only an economic growth engine, but also a national asset with deep significance for the country’s future, resilience and international standing.”

The report also recorded a rise in multinational companies operating in Israel, reaching 511, with 35 added during 2025.

Artificial intelligence continued to expand its footprint, with 35 per cent of all investments directed toward core AI companies.

Early 2026 data pointed to continued momentum, with approximately $US3.36 billion ($5.17 billion) raised in the first quarter despite the security environment.