When people talk about Israeli tech, most think of app and cyber startups. But one of the Israeli economy's biggest and most stable engines is an old, quiet and demanding industry: chips. In the AI era, when chips have become the world's most strategic asset, Israel's standing in the field is worth more than ever.
The story began decades ago. Intel opened a development center in Haifa back in the 1970s, some of its most important processors have been developed in Israel since, and its Kiryat Gat fab is one of the largest industrial sites in Israel. In 2017 Intel bought Jerusalem's Mobileye. Nvidia acquired Israel's Mellanox and built on it one of its largest development centers outside the US, which develops networking components critical to its AI chips. Apple, Google, Microsoft and Amazon also have chip teams in Israel.
Alongside the giants there is a whole chain of Israeli companies: Nova and Camtek make metrology and inspection systems for chip manufacturing, Tower manufactures chips to order in Migdal HaEmek, and Applied Materials and KLA develop equipment here. In the past week alone Nova, Camtek and Tower all reported record quarters. That is no coincidence: each sits at a different point in the AI chip chain.
Why Israel? Three reasons. The first is people: electrical engineers, physicists and optics experts, some trained in the army's technology units and some at the Technion and universities. The second is accumulated experience: decades of working with the giants created generations of engineers and managers who know how to build complex chips. The third is structure: Israel's chip companies rest not just on a clever idea but on deep know-how that is very hard to copy.
And why does it matter now? Because the chip industry is more stable than software. It needs plants, equipment and expertise, and it is less exposed to replacement by AI. While software companies cut jobs, chip companies hire. Challenges exist, including the global competition for engineers, the industry's cyclicality and reliance on a few customers, but over the coming decade chips may be Israeli tech's most important anchor.
