Israel’s Dual-Engine Chip Sector Drives Global Innovation and $40 B in Exits By The Media Line Staff Israel’s semiconductor industry is emerging as one of the country’s strongest technology drivers, combining global R&D centers with local startup ingenuity. A new report from Startup Nation Central, Israel’s Semiconductor Landscape 2025, describes how this “Two-Engine Paradox” fuels […]
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The Media Line: Israel’s Dual-Engine Chip Sector Drives Global Innovation and $40 B in Exits
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Israel’s Dual-Engine Chip Sector Drives Global Innovation and $40 B in Exits
By The Media Line Staff
Israel’s semiconductor industry is emerging as one of the country’s strongest technology drivers, combining global R&D centers with local startup ingenuity. A new report from Startup Nation Central, Israel’s Semiconductor Landscape 2025, describes how this “Two-Engine Paradox” fuels innovation critical to global computing and artificial intelligence systems.
According to the findings, Israel now hosts more than 250 active semiconductor companies—around 3.5% of its tech sector—employing roughly 45,000 people. The field has grown by 16% over the past decade, though the report notes a shift from fast expansion to more stable, capital-intensive growth. Intel and Nvidia remain the largest employers, together accounting for nearly 15,000 workers and extensive R&D operations.
Investment patterns show the strategic importance of the sector. For every $5 invested in US chip startups, $1 goes to Israeli firms—a 1:5 ratio that far exceeds the country’s general 1:15 investment ratio with the United States. Annual private funding has held steady between $400 million and $500 million following a record $1.2 billion raised in 2021, with recent major rounds including Quantum Machines’ $170 million and Retym’s $75 million. Median deal sizes are now two to four times higher than Israel’s national tech average.
Major acquisitions continue to integrate Israeli innovation into the global supply chain, from Intel’s $15.3 billion purchase of Mobileye to Nvidia’s $6.9 billion acquisition of Mellanox and KLA’s $3.4 billion purchase of Orbotech. Since 1996, the sector has seen about $40 billion in total exits.
“Israel’s semiconductor ecosystem has evolved into a global R&D powerhouse,” Startup Nation Central CEO Avi Hasson said in a press release. “Our engineers design the chips that power AI, cloud infrastructure, and defense systems. The next step is to grow companies that scale independently rather than sell early.”
Yariv Lotan, the group’s vice president for product and data, added that Israel’s challenge is cultural as well as financial. “The ecosystem’s reliance on exits, combined with high operational costs, has slowed new startup formation,” he said. “Its task now is to move from a ‘build-to-exit’ mindset to a ‘build-to-last’ model.”