In Israel, defense-related technologies replace cyber as highly sought-after high

Israeli high-tech industry affected by the war between Israel and Hamas

The Israeli high-tech industry has not been spared by the war between Israel and Hamas that began on October 7, 2023, following the pogrom perpetrated by the latter, and its regional repercussions.

High-tech companies have had to deal with massive staff reductions, as 15 to 20% of employees, and sometimes more, have been mobilized on the front lines.

Air traffic, essential for this international sector, has been suspended and foreign investors have frozen their investments while waiting to see what would happen.

In Israel, the war has also led to a brain drain. Between October 2023 and July 2024, 8,300 employees in the high-tech sector left the country for a year or more, representing 2.1% of the sector’s workforce.

In 2023, high technology growth had far outpaced GDP growth, with an increase of 13.7% compared to 1.8% for GDP. However, sector production stagnated in 2024 and 2025.

Israeli high-tech companies raised $15.6 billion in private financing in 2025, compared to $12.2 billion in 2024, according to figures released by Startup Nation Central (SNC) in December.

Groundbreaking innovation (“deep-tech”), which relies on major scientific or engineering advances (such as artificial intelligence, biotechnology, or quantum computing) to promote profound and lasting transformations, regained its pre-2021 levels in 2025, a year considered a historical peak for Israeli high-tech.

The past two years have also seen a spectacular increase in technological innovation in the defense sector, as the Israeli army was engaged on multiple fronts.

Between July 2024 and April 2025, the number of startups in this sector nearly doubled, increasing from 160 to 312.

Out of the 300+ emerging companies collaborating with the Israeli Ministry of Defense’s research and development department, “over 130 joined our operations during the war,” said Amir Baram, the ministry’s director-general, in December.

Operational issues in the field have led the ministry to “accept products that may not be fully finished or tested, from startups.”

Defense-related technologies have replaced cybersecurity as a highly sought-after high-tech sector.