The Media Line: ‘There Are Few Places on Earth Where True Innovation Keeps Coming—Israel Is One of   Them’ 

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‘There Are Few Places on Earth Where True Innovation Keeps Coming—Israel Is One of   Them’ 

As the world’s tech giants and investors return to Israel, the country’s innovation ecosystem faces a defining test—whether it can turn constant invention into lasting industrial strength 

By Gabriel Colodro / The Media Line 

Morning light reflects off Tel Aviv’s glass towers as the city settles into its usual weekday pace. Offices fill, deliveries crowd the streets, and meetings begin on time. The scene feels ordinary—deliberately so—in a country that has learned to keep its innovation engine running through every turn of uncertainty. 

Speaking to The Media Line, Yonatan Sela, a partner at Square Peg Ventures, said Israel remains one of the few places in the world where genuine innovation continues to emerge year after year. 

“The quality of the technical talent is outstanding, and the entrepreneurial nature of the people here is what turned this place into the highest startup-per-capita nation,” he explained. “In deep tech, particularly, we’re probably the second most successful market for investors looking for new ventures.” 

Square Peg, a multibillion-dollar global fund managing nearly $3 billion in assets and investing hundreds of millions in the Israeli market, reinforces that scale. 

Artificial intelligence hovered over nearly every discussion at the summit, which kicked off Deep Tech Week in Tel Aviv. In Israel’s ecosystem, AI is not a niche sector—it has become the connective tissue linking semiconductors, defense, and software. What began as a field of algorithms has evolved into the infrastructure of national strategy and industrial competition, transforming how Israel designs chips, trains models, and exports innovation. 

A new semiconductor report released by Startup Nation Central described what it called Israel’s “two-engine paradox.” On one side, a prolific generator of startups; on the other, a dense concentration of multinational R&D centers designing the world’s most strategic silicon. Both engines feed one another, yet operate under different constraints and speeds. 

The report highlights that much of Israel’s semiconductor strength now comes from AI acceleration—custom chips designed to handle the enormous computing loads behind generative models and defense-grade analytics. Countries like the United States and Taiwan dominate fabrication; Israel leads in niche design. Companies such as Habana Labs, NeuroBlade and NextSilicon placed Israel at the core of AI hardware innovation, bridging the gap between software models and physical computation. 

According to the report, Israel hosts more than 250 active semiconductor companies employing around 45,000 people—nearly 9% of its tech workforce. Early-stage funding has dropped to around 5% of the national venture total, roughly half of what it was a decade ago. The result: fewer startups, but those that form raise significantly larger rounds and often aim for acquisition from the start. 

“Acquisitions by global corporations have long been our main growth engine,” said Dr. Alon Stopel, chairman of the Israel Innovation Authority. “They create jobs and recycle expertise, but the transfer of ownership abroad deepens dependence.” 

That dependence is visible across the country. Intel’s expanding fab in Kiryat Gat, Nvidia’s growing footprint in Tel Hai, and Amazon’s chip-design hub in Haifa form a nationwide network of foreign-owned R&D campuses. Together, they sustain tens of thousands of engineers while concentrating strategic control in multinational hands. 

“The system produces world-class innovation,” Stopel said, “but rarely scales under Israeli ownership.” 

Avi Hasson, CEO of Startup Nation Central, described this era as one of lasting structure rather than quick wins. 

“We’re sensing an upbeat return of international traffic to Israel,” he said. “Executives keep coming back because they find here a unique combination of talent and maturity that serves their needs.” 

Yet for Hasson, the challenge is not only economic. 

“Technology always moves faster than people,” he said. “The real test is helping humanity catch up.” 

Globally, that test is playing out through AI itself. This technology has become the new oil of geopolitics—fueling alliances and rivalries from Washington to Beijing. The United States has poured billions into the CHIPS and Science Act; Europe and Japan are scrambling to keep up. For Israel, whose strength lies in design rather than fabrication, the question is how to turn its intellectual capital into long-term industrial leverage—and not merely out-design, but out-produce. 

Inside Tel Aviv’s conference halls, that dilemma translates into daily decisions. Eli Kalif, CFO of Teva Pharmaceuticals, explained how his company rebuilt its digital infrastructure to integrate AI deeply into operations. 

“When I joined Teva, we had more than 14 types of ERPs. Now we run as one, and that enables us to use AI differently,” he said. “I see daily sales in real time—10,000 SKUs—and AI tells me what I’ll learn in the next 10 days. Data shouldn’t dictate cycle decisions; it should enable decisions online.” 

For Kalif, artificial intelligence is not a buzzword, but a tool for competitive advantage. 

“It’s about doing better for our patients and scaling smarter.” 

From another sector, Michel Prassas, director of external relations for Europe at Corning, emphasized the value of longevity. 

“We survived 170 years by asking one question—what’s next?” he said. 

Corning, which invented everything from Edison’s light bulbs to Gorilla Glass, selected Israel as its European innovation hub after benchmarking ecosystems across the region. 

“The conclusion was crystal clear,” Prassas added. “The only place to be was Israel—not for hype or greed but for mindset.” 

That mindset now extends to the civic level. 

“Tel Aviv has been one of the leading tech hubs for about 15 years,” said Michal Michaeli, director of international economic development at the Tel Aviv Municipality. “Our challenge is keeping it there, because every city now wants to be a startup city.” 

Her colleague Alejandro Safdie, head of research and marketing for the city’s innovation ecosystem, added: “We think of Tel Aviv as a platform—a place where you can actually come and do your work.” 

Even through wartime disruption, the city’s economy showed resilience. Of the $12 billion raised by Israeli startups in 2024, about $8 billion came from Tel Aviv-based companies, generating more than $10 billion in exits. Fifteen new multinational R&D centers opened that year, underscoring what Michaeli called “an ecosystem that knows how to keep moving under pressure.” 

“It was about keeping companies functioning—helping reservists, small startups, and teaching them how to speak to investors again,” she said. 

The summit also spotlighted founders working on technologies that stretch the definition of deep tech. Magnus Metal, founded by veterans from Intel, Applied Materials, KLA, and Nova, is digitizing one of humanity’s oldest industrial processes. 

“Iron and steel represent 90% of all metal in the world, and we still make them the same way we did 4,000 years ago,” its founder told the audience. 

Their fully automated facility now produces precision parts for Caterpillar and the US Army with digital casting. 

“AI will not solve manufacturing,” he said. “Everything we use still needs to be made—and we’re bringing that to the digital age.” 

Minutes later, Hilla Haddad Chmelnik, CEO of Moonshot Space, unveiled a project blending AI with aerospace engineering: a kinetic electromagnetic accelerator capable of launching cargo into orbit without rockets. 

“We call it the tyranny of the rocket equation,” she said. “Ninety-six percent of a rocket’s mass is fuel. We’re replacing that with electricity.” 

Her system, designed for unmanned payloads, can reach hypersonic speeds at a fraction of current costs. 

“It’s not for humans—it’s 1,000 Gs—but for cargo it’s perfect,” she explained. “Since electrons will always be cheaper than fuel, we can afford to launch what others can’t.” 

Both presentations drew applause. In a country known for software, seeing molten metal and electromagnetic rails illustrated that deep tech in Israel remains literal—not metaphorical. And even those physical technologies increasingly rely on artificial intelligence for simulation, predictive control, and yield optimization. 

For outside observers, Israel’s ability to merge national security, innovation, and artificial intelligence remains both its competitive edge and its greatest structural dilemma. The country’s tech ecosystem grew out of military intelligence origins, and its most advanced engineers often serve directly in elite units. 

“Israel’s comparative advantage is not just engineering,” said one visiting analyst from Brussels. “It’s the integration between academia, startups, and defense. The challenge now is whether that same model can scale into purely civilian industries.” 

From the communications arena, Marc Cohen of APCO Worldwide remarked that the global perception of Israeli innovation remains remarkably consistent: 

“Despite everything—politics, diplomacy, war—Israel has always maintained a gold-plated reputation as one of the best places in the world for technology,” he said. “There’s sometimes nervousness about engagement, but every boardroom I’ve been in still puts Israeli innovation on a pedestal.” 

Such confidence coexists with a growing awareness that Israel’s model must evolve. 

“Acquisitions have recycled talent and wealth,” Hasson noted. “But the next stage is building companies that can scale under Israeli ownership.” 

The Israel Innovation Authority is promoting shared R&D infrastructure in quantum computing, photonics, and AI applications—fields that demand long-term collaboration rather than quick exits. 

For Hasson, artificial intelligence embodies both the promise and the warning of Israel’s next chapter. 

“One of the advantages of Israeli entrepreneurs is their ability to identify new opportunities and pivot quickly,” he said. “But now the challenge is different: to build to last, not just to build to sell.” 

He paused before adding, almost as an afterthought: 

“Artificial intelligence is no longer just a tool. It’s a mirror. It reflects how fast we can think—but also how easily we can lose the human tempo behind the technology.”