Israeli High-Tech Posts Record Exports and Exits as R&D Jobs Fall

By AI, Created 9:21 AM UTC, June 02, 2026, /AGP/ – Israel’s Innovation Authority says the country’s high-tech sector expanded in 2025 even as more activity shifted abroad and R&D employment declined for the first time in more than a decade. The report points to record exports, exits and fundraising, while warning that management, capital and development roles are increasingly moving outside Israel.

Why it matters: - Israeli high-tech remains a major driver of Israel’s economy, accounting for 18.3% of GDP and roughly half of total economic growth in 2025. - The report also flags a structural risk: more jobs, management and R&D activity are moving outside Israel, which could weaken the sector’s long-term advantage. - High-tech exports, fundraising and exits all hit or neared record levels, reinforcing the industry’s global weight.

What happened: - The Israel Innovation Authority published its 2026 High-Tech Status Report on June 2, 2026. - Israeli high-tech GDP reached NIS 352 billion in 2025, up 8.2% from 2024. - High-tech exports rose to about $85 billion. - Israeli high-tech companies raised about $14.6 billion in 2025, a 30% increase from 2024. - Exits totaled about $84 billion. - The sector employed about 400,000 people in Israel in 2025, or 11.4% of total employment.

The details: - Output per high-tech employee reached about NIS 827,000 in 2025, the highest in the economy. - High-tech’s share of Israeli GDP rose to 18.3% from 17.7% a year earlier. - High-tech exports made up 58% of total Israeli exports. - About 775 new startups were founded in Israel in 2025, up from about 750 in 2024. - Israel ranked fourth globally for capital raising and was the leading hub outside the United States, with nearly $15 billion raised. - First-quarter 2026 data showed about $3.36 billion in new capital raised. - Funding became more concentrated, with fewer rounds under $10 million and more mega-rounds from growth-stage companies. - Core AI companies received 35% of all investments. - Cybersecurity, enterprise software and fintech accounted for more than 60% of total capital raised. - Digital health and medical device fundraising declined sharply. - The report counted 198 exits involving Israeli companies in 2025, including 189 mergers and acquisitions worth about $18.5 billion. - IPO valuations rose 319% to $1.6 billion in 2025 from $390 million in 2024. - Israeli companies acquired 81 foreign companies in 2025. - 49% of Israeli companies sold were acquired by other Israeli companies. - More than 500 multinational companies have started operating in Israel since 2000, including 35 added in 2025.

Between the lines: - The report shows growth is being driven more by productivity gains and hardware manufacturing than by headcount expansion. - Hardware added about NIS 16 billion to output in 2025, while software services still produced 69% of Israeli high-tech output. - For the first time in over a decade, the number of R&D employees in Israeli high-tech fell, by about 3,500 workers. - The share of R&D employees dropped from 51% to 49% of industry employment, while product roles rose to 24%. - The share of private high-tech company employees based in Israel fell from 69% in January 2019 to 62% by March 2026. - Growth in overseas employment was concentrated in the United States, especially in sales, support, management and R&D. - The number of senior high-tech executives based in Israel fell by about 9.6% by March 2026, alongside growth in the United States. - R&D expansion outside Israel was most visible in Eastern Europe and the United States. - The report suggests artificial intelligence tools may be changing workforce composition by reducing some development work and increasing product roles. - Israel remains unusually dependent on foreign capital: 47% of business-sector R&D funding comes from foreign sources, versus an OECD average of 9%. - 70% of venture capital investment in Israel in 2025 was foreign investment. - Israel still had 61% of active investors as local firms or angels, while foreign venture capital funds made up about 25%. - 89 foreign corporate venture capital funds operated in Israel, compared with 13 Israeli CVC funds. - Israeli venture capital funds raised about $2.4 billion in 2025, up 57% year over year, though average fund size has fallen to about $60 million in recent years from about $90 million during 2016-2022.

What’s next: - The Israel Innovation Authority says the main challenge is to keep innovation, jobs and growth anchored in Israel even as global competition for capital and talent intensifies. - The report points to the need for deeper R&D investment, more international collaboration and the growth of larger Israeli high-tech companies. - Continued monitoring will focus on whether the shift in employment, leadership and R&D activity abroad accelerates in 2026.

The bottom line: - Israeli high-tech is still growing fast, but its center of gravity is slowly moving outward.