The wave of layoff reports in Israeli tech in recent weeks created a sense of deepening crisis. But according to an analysis by Dror Bin in Calcalist, the picture is more complex: AI isn't shrinking all of tech, but splitting it in two.
Software under pressure
On one side are software companies, which are laying off and slowing hiring. According to Calcalist data, the software layoff rate jumped to 6.6% in the first half of the year, more than twice the industry average. Tools such as coding agents let companies do more with fewer programmers, and at monday.com and Wix we've already seen cuts presented as part of a shift to AI.
Chips and infrastructure grow
On the other side, chip, computing infrastructure and deep-tech companies are expanding. Tower announced this week it will add about 150 employees in Israel after a record quarter, Intel is posting data center growth, and Nova and Camtek are expected to report records. According to the analysis, tech's headline numbers look stable, but beneath them a deep change in the workforce's makeup is under way.
What it means for workers
For anyone working in tech or considering it, the conclusion is clear: the skills in demand are changing. Knowledge of AI, infrastructure, chips and security is sought after, while "general" development roles are under pressure. Some experts also warn of "AI washing": using AI as an excuse for layoffs that actually stem from other causes, such as the strong shekel and wage costs.
