Israel's tech sector shows early signs of recovery

The conflict that began in October 2023 led to staffing shortages as many reservists were called up, and the sector is now reporting early recovery with renewed investment and defence-focused innovation.

Israel's technology industry, a large part of the national economy, was weakened by the conflict that began in October 2023 and its knock-on effects. The Israel Innovation Authority (IIA) notes the sector is important to exports, jobs and GDP. Firms reported staff shortages and some workers left the country, while foreign investment paused. With a ceasefire largely holding since October, some companies and investors have resumed activity and new projects have been announced. Reported details: - The IIA and industry sources reported that 15–20 percent of high-tech employees were called up as reservists, creating substantial staffing cuts. - An IIA report recorded about 8,300 advanced-technology employees leaving Israel for a year or more between October 2023 and July 2024, about 2.1 percent of the sector’s workforce. - A major foreign company announced plans in mid-December to create a large research and development centre in northern Israel, and leaders described renewed investor interest. - Preliminary industry figures cited a rise in private funding to $15.6 billion in 2025 from $12.2 billion in 2024, and the IIA reported deep tech activity returning to pre-2021 levels. Summary: The conflict disrupted staffing and investor activity and contributed to a pause in sector output in 2024 and 2025. Reported signs include returning projects and higher private funding, but the path forward remains undetermined at this time.