Thanks to massive investment from some of the industry's biggest names, Israel's cutting-edge tech sector is among the best in the world. Carefully crafted plans to attract top-level multinational companies have helped it earn its spot at the top.
Its technological prowess has especially garnered international attention (and sometimes scrutiny) in recent weeks following a series of attacks on its Hezbollah adversaries in Lebanon. This article tells the story of Israel's tech sector and its journey in becoming a global tech leader.
Read more: Are global tech giants facilitating Israel’s war on Gaza?
Big spender
According to the Organisation for Economic Cooperation and Development, Israel spent a whopping 6% of its GDP in 2022 on research and development—the highest ratio in the world. In 2021, Israel ranked seventh in the world for innovation, according to the Bloomberg Innovation Index. The next year, according to the Nature Index, the country ranked 16th for its share of scientific articles published worldwide.
Israel has enjoyed this status for a while. According to a 2016 United Nations Educational, Scientific and Cultural Organisation report, the country had “140 scientists and technicians per 10,000 employees”, which was “one of the highest ratios in the world”. In comparison, there were “85 per 10,000 United States and 83 per 10,000 in Japan."
A 2024 report, also from UNESCO, revealed that Israel was home to some of the world's top scientists (among them five Nobel laureates). In a country with scarce natural resources, this is a significant achievement.
In the past two decades, Israel has built up a vibrant knowledge-based economy with high- and medium-tech products that contribute to its GDP. Additionally, its vibrant venture capital market helps to foster innovation in small and start-up companies. Around 600 new startups were set up in only the last year alone.
Israel has around 9,200 tech firms and a 400,000-strong workforce. In 2023, its tech sector revenue reached $8bn. Israel’s Silicon Valley equivalent has attracted some of the biggest names in the tech industry. Based around Tel Aviv, it stretches across the coastline.
Major international firms include IBM, Motorola, Microsoft, Applied Materials, Qualcomm, Cisco Systems, Hewlett-Packard, SAP SE, Alcatel-Lucent, BMC Software, Philips, Technologies Inc, Broadcom, Marvell, Siemens, EMC Corporation, SanDisk, Google, Micron, Apple, Meta, Oracle, Amazon, eBay and Alibaba.
Overall, Israel is home to over 500 research and development centres of multinational corporations, many of them Fortune 500 companies. They operate alongside home-grown high-tech companies. Reuters reported this summer that Israel’s high-tech sector now accounts for 20% of the country's economic output, citing figures from the Israel Innovation Authority (IIA)—an independent public body responsible for helping drive economic growth.
Intel is Israel’s single biggest tech employer. In June last year, the global chipmaking giant announced plans to invest $25bn in a new factory in Kiryat Gat, expected to open in 2027. This would mark the largest international investment in Israel’s history.
Meanwhile, the southern city of Be'er Sheva in the Negev desert has come to be known as Israel's "internet capital," especially after the establishment of the CyberSpark Industrial Park. Here, two ultra-modern complexes house a dozen Israeli companies, start-ups, venture capital funds, and foreign groups, such as Lockheed Martin, Deutsche Telekom, Oracle, and IBM.
These companies already employ thousands of technicians, engineers, and researchers, many of whom have been trained in the computer sciences department of the local Ben Gurion University after links between academia and the private sector in the city were prioritised.
Cutting-edge warfare
Israel's successful detonation of thousands of pagers and walkie-talkies in Lebanon, carried by members of Hezbollah, put even more global eyes on Israel's sophisticated tech sector and growing abilities. The attack, which killed more than 40 people and injured around 3,000 people—some critically—had experts and observers scratching their heads as to just how they were able to pull off such a covert and large-scale attack.
Read more: Pager attack transforms 'axis of resistance' into 'axis of paranoia'
Even before the pager attacks, however, Israel's ability to manipulate and jam Global Positioning System (GPS) signals was being reported on. This jamming, known as GPS spoofing, does not block GPS signals but confuses them.
For decades, Israel's Mossad has worked with local agents, spies, and informants, as well as American and Western intel agencies. There have also been reports that social media, IT firms, and other high-tech companies, including Artificial Intelligence (AI) companies, have been used in this way. This assistance helped Israel eavesdrop via the penetration of wireless internet communications and mobile and fixed telephone networks.
All of this demonstrates the important and central role tech is playing in the development of lethal weapons and warfare—one that is designed to confuse and cripple adversaries.
