Israel’s Semiconductor Landscape 2025

From Innovation to Global Scale

3 November, 2025
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Finder Spotlight

Israel in the Global Semiconductor Race

4 November, 2025

Research and Insights: Maor Perlov, Senior Data Specialist, Startup Nation Central
Editors: Yariv Lotan, VP of Product and Data; Einat Ben Ari, Senior Director Data and Insights, Startup Nation Central.

Partners:
Advanced Systems Group LTD
Grove Ventures
Next Silicon
IIA - Israel Innovation Authority

Content

Executive Summary
Introduction
Blue and White Chips: Israel’s Semiconductor Journey
From Innovation to Scale: Building Israel’s Semiconductor Future
Israel Semiconductor Ecosystem Data & Trends
Conclusions
Executive Summary
Israel's "Two-Engine" Semiconductor Paradox
Introduction
Why Semiconductors Define the Global Tech Race
From Materials to Systems: The Semiconductor Value Chain
Blue and White Chips: Israel’s Semiconductor Journey
Early Foundations
Networking and Compute Powerhouse
AI Acceleration and Beyond
A Global Hub
Chips for Defense
Additional Pioneers
Legacy and Continuity
From Innovation to Scale: Building Israel’s Semiconductor Future
Israel Semiconductor Ecosystem Data & Trends
2025 Israeli Semiconductor Startup Landscape
Semiconductor Segments Included in the Landscape Map
2025 Israeli Semiconductor Multinational and Investors Landscape
From Expansion to Consolidation: Fewer Startups, Stronger Players
Funding Stages Reveal Structural Barriers
Funding Resilience in the Semiconductor Ecosystem
Israel’s Semiconductor M&A Journey
Notable M&As
The Public Face of Israel’s Semiconductor Ecosystem
A Nationwide Engine of Innovation and Inclusion
Conclusions
Methodology Notes
About Us

Executive Summary

Israel's "Two-Engine" Semiconductor Paradox

Yariv Lotan
VP of Product and Data, Startup Nation Central

The Israeli semiconductor industry is a global powerhouse in specialized innovation, though not in large-scale manufacturing. Unlike the United States, which leads in broad chip design, or Taiwan and South Korea, which dominate fabrication and memory production, Israel has carved out a distinct role as a world-class hub for semiconductor R&D and fabless design.

 

Israel’s semiconductor ecosystem runs on a “two-engine” model. It is both a prolific generator of high-impact startups and a critical R&D base for global tech leaders including Intel, Nvidia, Amazon, Apple, and Microsoft. Many of these companies now develop their most strategic, custom silicon and core IP in Israel.


This dynamic has fueled major M&A success and positioned Israel as a source of breakthrough innovation. Yet the ecosystem’s reliance on exits, combined with high operational costs, has slowed new startup formation. Its central challenge now is to evolve from a “build to exit” mindset toward a “build to last” model.

1. Israel's Unique Position: Global & USA Comparison

Israel’s strength lies in its deep, specialized intellectual property across emerging blue ocean markets, where it designs the core technologies that power high-growth industries.

 

  • Global Niche: Israel excels where others lag behind. IKey domains include:
    • Networking & Interconnects: A world leader in high-speed networking for AI data centers, built on the legacy of Mellanox (Nvidia) and Annapurna Labs (Amazon).
    • AI Acceleration: A proven hub for AI-specific chip design, for example Habana Labs (acquired by Intel) and Neuroblade (acquired by Amazon).
    • Metrology & Inspection: Home to leading independent public companies, including Nova and Camtek, that supply critical technologies for advanced manufacturing.
  • vs. United States Ecosystem:
    • Scope: The USA leads in broad-spectrum design (CPUs, GPUs) and EDA tools. Israel is focused on niche fabless design.

Funding Dynamics: Israel’s share of private semiconductor funding compared to the USA has declined from roughly 33% in 2019 to below 10% in 2024–2025, reflecting the USA GenAI chip surge and a phase of quiet consolidation in Israel.

2. Key Insights for the Executive (MNC & Corporate Leaders)

  • Israel is Your Core R&D, Not an Outpost: Your most strategic, next-generation custom silicon is being designed in Israel. This includes Amazon’s Graviton (CPU) and Nitro (networking) , Nvidia’s data center networking , Intel’s Gaudi (AI) chips , and Apple’s core M-series and sensor technology (like Face ID). Microsoft develops its own Cobalt (CPU) and Maia (AI) accelerators in the northern city of Haifa.
  • Self-Reinforcing Talent Engine: In Israel, multinational corporations serve as the primary university of the tech ecosystem. Their R&D centers train elite engineers who either go on to lead new internal initiatives or leave to found startups that are later acquired by the same corporations or their competitors, recycling experience and talent back into the ecosystem.
  • A Geographically Diverse & Stable Hub: Unlike the concentrated Tel Aviv tech hub, the semiconductor industry is spread across the country, from Kiryat Gat in the south to Yokne’am and Migdal HaEmek in the north. It is also a notable engine for workforce diversity, with Intel being the largest employer of Arab-Israeli engineers in high tech.

3. Key Insights for the Investor (VC & PE)

  • High Risk, High Value Exits: This is not a fast, scalable software play. The dominant exit path is high-value M&A (e.g., Mobileye $15.3B, Mellanox $6.9B, Habana $2B), not IPO.
  • Capital Intensity & High Barriers: The sector is defined by high capital intensity and long development cycles. The median semiconductor funding round in Israel is consistently 2-4 times larger than that of the general tech ecosystem. VCs are cautious because semiconductor startups face steep upfront costs for EDA tools and tapeouts, often running into millions.
  • A Market Gap in Early-Stage: The report flags a slowdown in new startup formation. This represents a missed opportunity for specialist VCs who are wary of the long timelines and high costs.
  • Where to Invest: Avoid red ocean markets such as general-purpose compute or memory technologies, where small companies cannot survive. Instead, focus on defensible niches including ASICs, AI-specific accelerators, photonics, and manufacturing equipment.

4. Key Insights for the Founder (Startup)

  • Expertise & Capital Are Non-Negotiable: Success demands deep domain knowledge (PhDs, postdocs) and a credible roadmap to raise tens to hundreds of millions of dollars. This is not a field for “three army veterans working on an application”.
  • Leverage the Pioneers: The ecosystem is defined by legacy and continuity, with early leaders such as Dov Moran, Avigdor Willenz, and Eyal Waldman remaining deeply involved as mentors and investors, creating a unique network and lasting asset.
  • The MNCs Are Your Ecosystem: Global tech giants are your main source of talent, your biggest competitors, and your most likely exit strategy. Your business plan must account for this dynamic.
  • Focus on a Bottleneck: You cannot out-Nvidia Nvidia. Find a specific, unsolved problem, for example in memory access, data acceleration, or AI inference, and build a defensible IP-moat around that solution.

Introduction

Why Semiconductors Define the Global Tech Race

Semiconductors are the tiny chips that make modern life possible. They run our phones, cars, hospitals, factories, and defense systems. Without them, economies would stall and national security would be at risk. Beyond their strategic role, semiconductors also represent one of the fastest-growing global markets. Valued at roughly USD 681 billion in 2024, the industry is projected by the World Semiconductor Trade Statistics (WSTS) to grow to USD 701 billion in 2025. Furthermore, there is a wide consensus that revenues will surpass USD 1 trillion by 2030, a forecast supported by leading industry bodies and market analysis firms including McKinsey & Company, Deloitte, PwC, and SEMI.

Despite the enormous market value, semiconductor production remains highly concentrated and vulnerable. Advanced chipmaking demands nanometer-scale precision, specialized equipment, and investments of tens of billions of dollars. Only a handful of countries control the most critical parts of this supply chain: Taiwan and South Korea dominate manufacturing, with TSMC producing most of the world’s leading-edge chips; the United States and Israel lead in chip design; and Europe and Japan in lithography tools, materials, and other specialized equipment. This concentration leaves the world economy and national security exposed to  political conflict, supply disruptions, or technological bottlenecks

These vulnerabilities have pushed semiconductors to the top of government agendas worldwide. The United States enacted the CHIPS and Science Act to strengthen domestic manufacturing and research, while the European Union’s Chips Act aims to double its global market share by 2030. Japan is subsidizing new fabs, China is investing hundreds of billions to achieve self-sufficiency, and countries from India to Israel are rolling out their own semiconductor strategies. This global race reflects both economic and strategic value in an era of geopolitical competition.

Israel is home to many of the world’s leading semiconductor companies, making it a strategic global hub. Intel operates one of its largest development centers in the country. Applied Materials runs its biggest R&D site outside the United States. Nvidia transformed its Israeli footprint through the $7 billion acquisition of Mellanox in 2020, integrating its high-performance networking capabilities—now central to AI—and becoming one of Israel’s largest technology employers, with more than 5,000 staff.

Alongside these giants, Israel’s startup ecosystem is a driving force in semiconductor innovation. Dozens of ventures are advancing AI accelerators, cybersecurity hardware, and defense-related chips, with several securing substantial global investment and scaling rapidly. This density, fueled by exceptional engineering talent, an entrepreneurial culture, and decades of strategic investment, has transformed Israel from a peripheral outpost into a global R&D powerhouse.

From Materials to Systems: The Semiconductor Value Chain

At their core, chips are integrated circuits composed of millions or billions of transistors on a silicon wafer. Their importance lies in their versatility. They can be designed for general-purpose tasks, such as powering a laptop, or as Application-Specific Integrated Circuits (ASICs), optimized for a single, highly specialized function. Running everyday applications on a smartphone versus enabling high-performance simulations in a supercomputer, for instance, requires very different chip architectures tailored to performance, power, and thermal constraints.

For decades, the guiding principle of the industry was Moore’s Law, articulated by Intel co-founder Gordon Moore: the number of transistors on a circuit doubles roughly every two years. This relentless miniaturization drove exponential gains in performance and efficiency. In recent years, however, the pace has slowed as physical and economic limits are reached, shifting the focus toward complementary strategies such as heterogeneous integration, chiplets, and “More than Moore” innovations. Looking ahead, researchers are pursuing “Beyond CMOS” paradigms. New device concepts and materials such as carbon nanotubes, spintronics, and silicon photonics, could eventually extend or replace conventional transistor scaling.

The semiconductor ecosystem can be understood through two complementary lenses: what chips do (their function) and how they are made and delivered (their place in the value chain). Together, these perspectives provide a complete picture of both technology and industry structure.

Functional Taxonomy: What Chips Do

Semiconductors can be grouped by their primary role in digital systems.

Compute Chips

Compute chips process data and execute instructions, spanning general-purpose CPUs and embedded microcontrollers to high-performance accelerators such as GPUs and AI processors.

Network Chips​

Network chips manage the flow of data within and between systems, enabling connectivity across devices and data centers.

Storage and Memory Chips

These three categories form the building blocks of nearly every modern electronic system.

Value Chain Taxonomy: How Chips Are Made and Delivered

The value chain describes how semiconductors progress from raw materials to finished subsystems.

Design and R&D​

Design and R&D includes intellectual property providers and design tool firms, fabless companies that create chip architectures but outsource production, foundries that manufacture chips on behalf of designers, and integrated device manufacturers (IDMs) that combine design and fabrication under one roof. This is where functional categories of compute, network, and storage, are translated into physical silicon.

Manufacturing and Fabrication

Manufacturing and Fabrication provide the inputs and tools for fabrication, including silicon wafers, specialty gases, photoresists, and the highly complex machinery used for lithography, deposition, etching, inspection, and metrology. Firms in this segment, such as those specializing in nanoscale measurement and defect detection are indispensable for achieving the precision and yields required in advanced fabrication.

Assembly, Packaging, and Testing

Assembly, Packaging, and Testing prepare chips for use and integration into higher-level systems. This encompasses packaging and testing, often carried out by outsourced assembly and test providers, as well as system integration, where semiconductors are built into modules and subsystems such as sensors, communications components, and automotive platforms

Blue and White Chips:
Israel’s Semiconductor Journey

Blue and White Chips: Israel’s Semiconductor Journey

For decades, Israel has cultivated one of the most vibrant semiconductor ecosystems in the world. What began with a few visionary engineers has grown into a global innovation hub, powered by bold investments, strategic acquisitions, and entrepreneurial talent. The result is a sector that not only drives technological progress but also plays a measurable role in Israel’s economy.

Early Foundations

The story begins in 1971, when Intel engineer Dov Frohman returned from California to establish a small design center in Haifa, the company’s first site outside the United States. In the 1980s, he persuaded both Intel and the Israeli government to take a bolder step, leading to the opening of Fab 8 in Jerusalem, Intel’s first manufacturing facility abroad. This milestone paved the way for the development of the vast Kiryat Gat campus, now home to Fab 28, Intel’s largest manufacturing site in Israel.

Over the decades Intel became the largest private employer in Israel’s tech sector, with roughly 14,000 people working across engineering, operations, and manufacturing. It also played a central role in Israel’s M&A history, acquiring DSPC in 1999, the nation’s first over billion-dollar tech exit ($1.6 billion), and Mobileye in 2017 for $15.3 billion which was, until recently, Israel’s largest deal. In 2023, Intel announced another transformative $25 billion expansion at the Kiryat Gat campus(Fab 38), supported by a $3.2 billion state grant. Analysts estimate that Intel alone contributes a measurable percentage of Israel’s GDP, with Fab 38 expected to employ more than 10,000 people directly and indirectly.

“The bold initiative of Dov Frohman turned into a great success story – only to grow with time. Today, the Kiryat Gat FAB employs around 10k people with about 2–3 employees in the general eco-system supporting each worker. Intel accounts for a noticeable percentage of Israel’s GDP.”

  • Dr. Alon Stopel, Chairman of the Innovation Authority and Chief Scientist for Innovation at the Ministry of Innovation, Science and Technology

Networking and Compute Powerhouse

In the 1990s a new generation of entrepreneurs expanded Israel’s semiconductor leadership. In 1993, Avigdor Wilentz and Eyal Waldman co-founded Galileo Technology, a pioneering VLSI design firm. Galileo’s acquisition by Marvell in 2000 was both a landmark financial event and a validation of Israel’s advanced design capabilities, inspiring dozens of new ventures.

Wilentz went on to back ventures such as Leaba Semiconductor, later acquired by Cisco, and Annapurna Labs, acquired by Amazon in 2015. Annapurna became the cornerstone of Amazon Web Services’ custom silicon strategy, responsible for the Graviton ARM-based processors, the Inferentia and Trainium AI chips, and the Nitro system for networking and security offload. These technologies now power much of AWS’s global cloud infrastructure.

Waldman launched Mellanox, which grew into a world leader in high-performance networking chips for data centers and supercomputers. The company went public on NASDAQ in 2007 and completed 11 acquisitions, many of them local startups, before being acquired by Nvidia in 2019 for $7 billion. Today, Mellanox is central to Nvidia’s data center division, powering accelerated computing and AI workloads with its InfiniBand and Ethernet interconnects.

AI Acceleration and Beyond

The 2010s added another dimension with dedicated processors for artificial intelligence. In 2016 Habana Labs emerged as a breakthrough startup developing AI-specific silicon. Its Gaudi training processors and Goya inference chips offered an alternative to Nvidia’s GPUs, optimized for data centers. Intel acquired Habana in 2019 and integrated it into its AI hardware portfolio. The Gaudi2 processor now sits at the core of Intel’s strategy to compete in the fast-growing AI accelerator market.

At the same time global technology leaders deepened their reliance on Israel through strategic acquisitions. Apple entered in 2012 with the purchase of Anobit, a specialist in flash memory controllers, followed in 2013 by PrimeSense, whose 3D sensing technology laid the foundation for Face ID and Apple’s AR capabilities. These deals anchored Apple’s largest R&D hub outside of the United States, where Israeli teams work on storage, wireless, CPU design, and Apple’s M-series chips.

Amazon’s 2015 acquisition of Annapurna Labs gave it a decisive edge in building custom silicon for AWS, tightly integrated into its cloud architecture. Microsoft also established a major semiconductor base in Haifa, where engineers developed the ARM-based Cobalt CPU, the Maia AI accelerator, and the networking and infrastructure chips that keep Azure efficient and secure. Together, these initiatives gave the world’s largest cloud providers greater independence from external chip vendors and cemented Israel as a critical node in global cloud infrastructure.

A Global Hub

Beyond the headlines, Israel has become a magnet for the world’s largest semiconductor corporations. Qualcomm, Samsung, Broadcom, KLA, and Applied Materials all operate significant R&D or engineering facilities across the country. Their presence highlights Israel’s dual strength, both as a cradle of entrepreneurial startups and as a global research hub where multinationals invest to secure the future of semiconductor innovation.

Avi Hasson

“With the digitalisation and electrification of everything, and with the AI boom, we will need more and more chips,” says Avi Hasson, CEO of Startup Nation Central. “But the need for more compute power, in a smaller physical footprint and with lower power consumption, is becoming increasingly sophisticated, challenging the limits of physics. Developing a new chip typically requires tens of millions of dollars, often far more.

 

You’ll see fewer startups pursuing chip development, and fewer investors willing to fund them. Consequently, Israel’s role in the global market is reshaping. Shifting from a focus on generating many startups and M&As, Israel’s tech talent is now becoming a crucial part of multinational players with large R&D centers.”

  • Avi Hasson, CEO, Startup Nation Central

Chips for Defense

In the 1970s, amid international embargoes and restricted access to critical technologies, Israel’s defense sector turned to semiconductors to ensure self-reliance. Dedicated subsidiaries were established to develop and produce the components vital for national security.

Gal-El, based in Ashdod, specialized in radio-frequency (RF) and mixed-signal chips for defense communication and radar systems. In December 1976, SCD (SemiConductor Devices) was founded in Migdal HaEmek as a joint venture of Rafael and Elbit Systems, focusing on infrared and electro-optical sensors for missile guidance, thermal imaging, and surveillance. Together, these firms supplied the Israel Defense Forces (IDF) while also exporting abroad, generating revenues in the hundreds of millions of dollars.

Any count of Israel’s semiconductor fabrication facilities must therefore extend beyond commercial leaders such as Intel and Tower to include Gal-El and SCD. These defense-driven fabs illustrate how national security imperatives helped lay the foundations for Israel’s broader semiconductor ecosystem.

Additional Pioneers

Israel’s early semiconductor ecosystem also attracted global market leaders. Motorola established a local subsidiary as early as 1964, adding a semiconductor unit in 1982. National Semiconductor opened an R&D center in 1978 and later launched a fabrication facility in Migdal HaEmek. That fab was spun out in 1993 as Tower Semiconductor, which has since grown into a multibillion-dollar public company with thousands of employees worldwide.

The same period saw the emergence of Israeli-born innovators. M-Systems, founded in 1989, pioneered flash storage technology and became a global leader before being acquired by SanDisk in 2006. Orbotech, founded in 1981, became a world leader in inspection and imaging tools for semiconductors and printed circuit boards, remaining independent for decades before being acquired by KLA in 2019. Saifun Semiconductors, established in 1998, developed non-volatile memory IP and went public on NASDAQ before merging into Spansion, extending Israel’s role in global flash memory innovation. TransChip, founded in the mid-1990s, specialized in CMOS image sensors and was acquired by Samsung in 2007, becoming the base for Samsung’s Israeli semiconductor activities.

While many Israeli semiconductor companies of this era were eventually acquired by global players, a small number remained independent and continued to grow. Two of these – Nova, founded in 1993, and Camtek, incorporated in 1987 – have built lasting positions in process control, metrology, and inspection. Both are still publicly traded and have expanded significantly in recent years, cementing their roles as key suppliers to the global semiconductor value chain.

“There is a huge presence in Israel of multinational companies developing fabless chips. Some have been built through M&A activity, while others have grown organically. We love to see startups and M&As, but there is another model – represented by companies such as Nova and Camtek – of becoming a fully independent company, showing that Israel can also compete globally in specialized niches like metrology and inspection.”

  • Dr. Alon Stopel, Chairman of the Innovation Authority and Chief Scientist for Innovation at the Ministry of Innovation, Science and Technology

Legacy and Continuity

Far from being a nostalgic label, the pioneer metaphor remains apt. In Israel’s semiconductor arena, as in its cybersecurity sector, the first generation of founders did more than inspire those who followed. They became mentors, investors, and serial entrepreneurs, creating a self-reinforcing cycle where experience, capital, and vision continually flow back into the ecosystem. Each new wave of companies is able to build on accumulated knowledge and networks rather than starting from scratch. As global demand for semiconductors accelerates and innovation approaches the limits of physics, Israel’s continuity of talent and entrepreneurial culture positions it to sustain past achievements and also to shape the next generation of breakthroughs.

From Innovation to Scale:
Building Israel’s Semiconductor Future

From Innovation to Scale: Building Israel’s Semiconductor Future

Eyal Waldman
Eyal Waldman
Chairman of Waldo Holdings and Co-founder of Mellanox

The semiconductor industry is in the midst of a historic expansion. Data volumes are surging, sensors are embedded in every aspect of life, and systems demand ever greater computing power. This environment creates enormous opportunity for new ideas and fresh architectures. Having built companies like Galileo and Mellanox, I have seen how Israeli innovation can scale globally, and today I continue to support the next generation of entrepreneurs shaping the future of semiconductors.

Startups in this field remain vital. Even with rising costs and growing technical complexity, small and focused teams can still create breakthrough solutions. Success comes from identifying specific bottlenecks, whether in memory, interconnect, or AI workloads, and rethinking system design to deliver stronger performance and efficiency. This is why I invest in companies working on new approaches to data acceleration, near-memory computing, and machine learning inference. These challenges are real, and solving them will define the next frontier.

Israel’s advantage lies in its people and culture of innovation. Decades of experience in design, project execution, and system architecture have created a unique foundation. To build on this, we must continue investing in education, cultivate more engineers, mathematicians, and physicists, and provide shared infrastructure that supports advanced research in areas such as quantum computing and AI. Combined with an entrepreneurial spirit and strong collaboration between government, academia, and industry, these strengths will ensure Israel remains at the forefront of global innovation.

Mergers and acquisitions also play a strategic role. They are not only financial transactions but practical tools for accelerating roadmaps, integrating critical technologies, and strengthening competitiveness. This approach should remain central for the next generation of companies, using partnerships and acquisitions to expand capabilities and build real leadership at scale.

By nurturing talent, encouraging bold ideas, and creating the right conditions for innovation, Israel will continue to produce semiconductor companies with global impact. The future of computing will be shaped here as much as anywhere else.

Israel Semiconductor Ecosystem
Data & Trends

2025 Israeli Semiconductor Startup Landscape

The 2025 Israeli Semiconductor Landscape Map highlights notable companies operating in the design and manufacturing layers of the semiconductor value chain.

Click here for a list of all the Israeli Semiconductor companies

The future limits of computing are not only about transistor scaling. The real bottlenecks are heat dissipation, packaging yields, interconnect bandwidth, and inspection – and in some of these areas Israel already has unique strengths.”

  • Dr. Alon Stopel, Chairman of the Innovation Authority and Chief Scientist for Innovation at the Ministry of Innovation, Science and Technology

Semiconductor Segments Included in the Landscape Map

EDA and IP

Companies that develop Electronic Design Automation (EDA) software, semiconductor IP, and data-driven intelligence tools used before wafer fabrication enabling chip and system design, verification, simulation, and optimization.

Logic IC

Startups in Logic IC design and develop integrated circuits that perform computation and control functions. This includes processors, AI accelerators, NPUs, and specialized digital chips optimized for power efficiency and performance. They are central to modern compute systems, driving advancements in data processing and intelligent devices.

Memory IC and Storage Solutions

This segment focuses on chips and architectures for data storage and access, including DRAM, NAND, and emerging non-volatile memories. Startups innovate in density, endurance, and speed, often developing new materials or architectures to overcome existing memory bottlenecks. These technologies complement logic ICs to enable efficient data handling in computing systems.

Interconnect and Networking IC

Startups in this category develop integrated circuits and photonic components for data movement within and between chips, boards, and systems. They focus on high-speed interconnects, SerDes, optical links, and networking protocols that enhance bandwidth and reduce latency. These technologies underpin scalable computing and communication infrastructures.

Imaging and Ranging Sensors

This category includes startups creating sensors that capture and interpret visual and spatial information. Technologies include CMOS image sensors, LiDAR, and time-of-flight systems used in robotics, automotive, and consumer devices. These semiconductors convert light or depth data into digital signals, enabling machine perception and vision.

Physical Sensors

Startups in this category develop physical and environmental sensors for semiconductor-based devices that detect movement, force, pressure, sound, or chemical and biological properties.

Materials and Substrates

This category includes startups developing the foundational materials that enable semiconductor fabrication. These companies focus on engineered substrates, compound semiconductors, epitaxial wafers, and advanced thin films that improve device performance, yield, and thermal or electrical properties. Their innovations support the entire upstream semiconductor ecosystem, forming the basis for chip manufacturing and integration

Fab — Process & Equipment

Companies that develop or operate the technologies, equipment, and analytics systems used during semiconductor fabrication — spanning wafer manufacturing, process control, metrology, and yield optimization. This stage includes both foundries that perform chip fabrication and the technology providers that enable in-fab precision and performance.

Post Fab (APT)

Companies that design and produce hardware systems used after wafer fabrication, including assembly, packaging, additive manufacturing, and device-level testing or inspection.

Quantum and Photonic Computing

This category includes startups developing next-generation computing architectures and device technologies that move beyond traditional CMOS logic. These companies harness quantum, photonic, neuromorphic, and other non-classical physical principles to perform computation, data transfer, or signal processing with fundamentally new mechanisms of information encoding. Their innovations span quantum processors, photonic computing systems, novel transistor concepts, and hybrid analog-digital architectures, enabling exponential performance gains in speed, efficiency, and parallelism.

2025 Israeli Semiconductor Multinational and Investors Landscape

The 2025 Israeli Semiconductor Multinational and Investors Map highlights notable non-Israeli R&D centers and top investors.

Click here for a list of all multinational investors & R&D centers

From Expansion to Consolidation: Fewer Startups, Stronger Players

As of October 2025, Israel is home to more than 250 active semiconductor companies, representing roughly 3.5% of the Israeli technology ecosystem. Over the past decade, this number has grown by 16%, a steady but more modest increase compared to the 37% expansion of the broader tech sector during the same period.

Semiconductor companies experienced rapid growth from 2016 to 2018, at times outpacing the broader ecosystem. Growth then stabilized at high levels through 2019-2021, before moderating in recent years.

Funding Stages Reveal Structural Barriers

Semiconductors have a more balanced company stage distribution than Israel’s startup-heavy tech ecosystem. The semiconductor sector is far less weighted toward startups than the broader tech market, with 38% of companies at the early stage compared to 59% overall. A larger share has reached maturity (31% vs. 23%), reflecting an established base in chip design and manufacturing. Growth-stage companies remain limited (10%), constrained by capital intensity and long development cycles. Public companies account for nearly 10% of the sector, more than double the overall share, underscoring the importance of public markets for financing. Acquisitions are also more common (11% vs. 7%), as larger players consolidate emerging firms to secure technology, IP, and talent. Compared to the broader startup- ecosystem, semiconductors display a more even spread across stages, shaped by the industry’s capital intensity and long development cycles.

Over the past decade, Israel’s semiconductor industry has evolved from a period of rapid expansion to one defined by consolidation. The number of active companies remains high, but the pace of new startup formation has slowed significantly. Capital intensity, long development cycles, and a wave of acquisitions by global players have concentrated activity among established firms. While this reflects the sector’s growing sophistication, it also signals a gap in early-stage innovation.

Shlomo (Sol) Gradman

“The major problem facing Israeli high-tech today is that, despite the accumulated knowledge, experience, and major successes, there are almost no new startups emerging in the semiconductor space. At a time when the entire world recognizes the strategic importance of semiconductors for fields like AI, automotive, and data centers, Israel is not producing new companies in this domain. This could be a missed opportunity with long-term consequences.”

  • Shlomo (Sol) Gradman, CEO, ASG Ltd., Chairman, The High Tech CEO Forum. Founder and Co-Chair of ChipEx

“Although there’s a clear trajectory in the chip world towards large multi-national players, especially in the compute segment, there’s still ample room for innovation in other segments (like networking and storage) and in large, new niches. Therefore, the startup scene is still flourishing with novel ideas. Indeed, designing the first generation of a chip can take a few years and cost, as a rule of thumb, about $150 million. However, the companies that succeed can face tens of billions in revenue streams, attracting certain types of investors”.

  • Elad Raz, CEO & Founder NextSilicon

Funding Resilience in the Semiconductor Ecosystem

Israel’s semiconductor ecosystem has shown steady and sustainable growth over the past decade, driven by strengths in chip design, connectivity, and AI-related hardware. From 2014 to 2020, private funding increased from $0.1B to $0.7B, supported by a strong engineering base and consistent startup formation in core semiconductor technologies.

The market reached a high point in 2021, with $1.2B raised across 48 deals. In the following years, funding has remained stable at around $0.4-0.5B per year, a level that reflects a more measured investment pace after a period of rapid expansion.

The USA semiconductor market has expanded at a larger scale, supported by federal incentives and domestic manufacturing initiatives.

Funding volumes rose from around the $1-2B range in 2014-2017 to over $5B in 2021, and after a brief correction in 2022, capital inflows rebounded sharply. 

In 2025, USA semiconductor venture funding was dominated by a handful of very high ticket rounds that reshaped the sector’s landscape. Companies like Cerebras Systems ($1.1 billion) and PsiQuantum ($1 billion), as well as Groq’s significant $750 million round pushed total semiconductor funding up despite a decline in deal volume.

When comparing Israeli and USAs semiconductor share of overall funding activity within their respective ecosystems from  2014 to 2025, the share in Israel is consistently higher than the share in the USA. However, in recent years the share has decreased in Israel and increased in the USA. Furthermore the share of funding amount is always higher than the share of deals in both countries indicating that the deal sizes in the domain are usually higher than in other domains.

In Israel, the semiconductor share of the private funding amount peaked in 2017 with nearly 9% of the entire ecosystem funding going to Semiconductor startups that year. Today the share is around 5%. In the USA the share fluctuated between 1.2%-1.8% until 2023 and since then it is on the rise and has already reached 3.4% this year. 

The share of deals is more stable than the share of the funding amount.  In recent years it has been in the range of 3%-4% in Israel and  around 1% in the USA.

The median round size tells the deeper story.In almost every year, semiconductor funding rounds in Israel are two to four times larger than the average round across the broader tech ecosystem. This highlights that while the sector produces fewer startups and fewer deals, those that do emerge tend to raise significantly larger amounts. Even in 2025, with only 12 semiconductor deals recorded so far, the median round size rose to $35 million, driven by major late-stage financings such as Quantum Machines ($170 million) and Retym ($75 million).

Median round sizes in both Israel and the USA ranged between $5 million and $10 million from 2014 to 2024, with the USA surpassing Israel in recent years (2020–2024). Both markets peaked this year, driven by several large-scale funding rounds.

Dov Moran

“The semiconductor industry has always been a challenging one, and it’s only become harder to succeed. It’s a field that requires immense funding and a “length of breath” to see through. In addition to financial staying power, it demands a unique type of talent—it’s not like three army veterans working on an application. Some of the semiconductor companies in our portfolio will need hundreds of millions of dollars over the long term, not tens, but the potential for enormous returns, as seen in the valuation of a company like Nvidia, makes it a worthwhile pursuit”.

  • Dov Moran, Founder & Managing Partner, Grove Ventures

Israel’s Semiconductor M&A Journey

While private funding drove the growth of Israel’s semiconductor ecosystem, M&A data reveals how that investment translates into concrete outcomes and long-term global integration. Over the past three decades, 120 mergers and acquisitions involving Israeli semiconductor firms totaling over $40B demonstrate a clear progression from early design-focused startups to global leadership and, more recently, to specialized integration within multinational R&D networks. There was a peak in the amount invested in acquisitions in the years 2016-2020 driven by a few very high ticket deals, including Intel’s $15.3 billion acquisition of Mobileye, Nvidia’s $6.9 billion acquisition of Mallanox, and KLA Corporation’s $3.4 billion acquisition of Orbotech.

Notable M&As

The Public Face of Israel’s Semiconductor Ecosystem

Israel’s semiconductor ecosystem is anchored by a diverse group of publicly traded companies spanning chip design, manufacturing, metrology, and advanced sensing technologies. Listed on major exchanges including NASDAQ, NYSE, TASE, and ASX, these firms embody the country’s global reach and technical depth, from precision metrology (Nova, Camtek) to automotive perception (Mobileye, Arbe Robotics) and connectivity (Valens). Over the past decade, several high-profile public listings have reinforced Israel’s position on the global stage. Mobileye’s 2022 re-listing on the NYSE, which raised approximately $861 million, was one of the largest tech IPOs of the year, following its 2014 debut and later acquisition by Intel.

These milestones build on the foundation established by earlier pioneers such as Mellanox Technologies (NASDAQ IPO in 2007, $102 million, later acquired by Nvidia), Camtek (NASDAQ IPO in 2000, $39 million), and Tower Semiconductor (NASDAQ IPO in 1994). Together, they helped position Israel as a key player in semiconductor manufacturing, testing, and interconnect solutions.Collectively, these companies illustrate how Israeli innovation spans the full semiconductor value chain, from core R&D to global-scale production and commercialization.

A Nationwide Engine of Innovation and Inclusion

According to the Israel Innovation Authority, the semiconductor industry in Israel employs approximately 45,000 people, representing about 9% of the country’s total tech workforce. Within this, Nvidia employs around 4,500 people in Israel, about 12% of its global workforce of 36,000, while Intel employs roughly 9,300 people in Israel, about 8% of its global workforce of 124,800.

Unlike much of the Israeli tech industry, which is heavily concentrated in central Israel – particularly Tel Aviv – the semiconductor sector is more geographically distributed. Fabrication plants (fabs) and related facilities are spread across the country, from Migdal Ha’Emek and Yokne’am in the north to Ashdod and Be’er Sheva in the south. For example, Nvidia maintains an office in Tel Hai, near the border with Lebanon.

Beyond geographic diversity, there is also diversity in professional roles. While software companies primarily recruit programmers, semiconductor companies rely on a broader set of roles to sustain both R&D and manufacturing operations. The workforce includes process engineers, equipment technicians, and quality control specialists, alongside design and development engineers. This diversity reflects the industry’s dual reliance on advanced research and large-scale production.

The industry stands out for the strong representation of Arab-Israelis, from entry-level engineers to senior executives. Intel is the leading employer of Arab-Israeli engineers, with some advancing to influential roles at global companies such as Apple, Amazon, and Cadence.

The largest employers in Israel’s semiconductor sector are multinational corporations. The table below presents the leading companies considered core semiconductor firms. It is important to note that other multinational corporations such as Meta and Microsoft also maintain local business units related to semiconductors, even though they are not primarily classified as core semiconductor companies.

Conclusions

The story of Israel’s semiconductor industry rests on a central paradox. Acquisitions by global corporations have long been the ecosystem’s main growth engine, recycling capital, expertise, and talent back into the market. These exits have produced serial entrepreneurs and angel investors, anchored multinationals such as Apple, Intel, and Nvidia in Israel, and created world-class training grounds for future innovators. Yet this successful model comes with a cost: the transfer of ownership and long-term value abroad, deepening strategic dependence. The policy challenge is to evolve this engine, building on its foundation to create homegrown companies that reach global scale independently.

Dov Moran

“We’ve built a legacy of creating globally impactful chip design startups, consistently innovating in areas like communications and networking. While the sale of companies like M-Systems or Annapurna Labs can be incredibly successful, the ultimate ambition for Israel is to continue nurturing these deep-tech ventures, fostering specialist founders with profound knowledge, and focusing on application-specific chips and even quantum, to ensure we remain at the forefront of the semiconductor world. Our talent is world-class; the challenge lies in cultivating the long-term vision and investment to grow these seeds into enduring global forces.”

  • Dov Moran, Founder & Managing Partner, Grove Ventures
Avi Hasson

“The M&A-driven model has been incredibly successful in building the ecosystem, but for Israel to become a true global tech leader, we need more companies to go the distance. We need to build companies that are acquirers, not just acquirees. It’s about shifting the mindset from ‘exit’ to ‘build to last’.”

  • Avi Hasson, CEO, Startup Nation Central
Scale and Investment

Global manufacturing is driven by foundries such as TSMC, while companies like Nvidia demonstrate the strength of the fabless design model. Israel’s advantage lies in design and system architecture, supported by a robust venture capital ecosystem that funds high-risk innovation. However, the VC model operates on seven- to ten-year cycles, often pushing companies toward early exits and making mergers and acquisitions the dominant growth path. The policy challenge is to complement venture capital with long-term public investment that enables companies to scale beyond the VC horizon.

Shlomo (Sol) Gradman

“Today, the global semiconductor market is booming. Beyond the phenomenal success of companies like NVIDIA, Broadcom, AMD, and others, nearly all major tech giants have entered the field and are now developing their own chips, including Amazon, Google, and Apple. Moreover, governments of leading Western nations, including the USA, the European Union, the UK, Canada, India, and Japan, are investing billions in the semiconductor industry. Far more than they are doing in any other sector.”

  • Shlomo (Sol) Gradman, CEO, ASG Ltd., Chairman, The High Tech CEO Forum. Founder and Co-Chair of ChipEx
Human Capital

Israel’s engineers are world-class, in part because the local R&D centers of global corporations serve as a university for talent, bringing invaluable experience into the ecosystem. This continuous flow of expertise is one of Israel’s core strengths. The strategic challenge, as noted by leaders such as Eyal Waldman, is to ensure that this world-class talent is also rooted in long-term, Israeli-owned projects. Without that balance, Israel risks becoming primarily a reservoir of skills for others rather than building its own industrial foundation. Expanding academic programs and advancing national R&D consortia are essential to create compelling local opportunities for this talent to grow and lead.

Moments of Transition

The global semiconductor race is a geopolitical contest as much as an economic one. The USA has enacted the CHIPS and Science Act, while Europe, Japan, China and other Asian economies are rolling out large-scale initiatives to secure manufacturing and scale. Israel faces both risks and opportunities in this new landscape. Despite accounting for only a small share of the global semiconductor market, Israel has the potential to exert outsized influence. By actively engaging in allied initiatives and leveraging its strengths in frontier domains such as AI-focused chips, photonics, and quantum computing, Israel can significantly expand its global impact and strategic relevance.

More on the Israeli Tech Ecosystem

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Methodology Notes

The companies featured in this spotlight and on the associated map were selected based on key indicators of innovation and impact, including recent funding rounds or government grants, notable milestones, strategic partnerships, and the uniqueness of their technology.
The report is based on the Startup Nation Finder database, except for global metrics, which are based on Pitchbook. Private Funding includes the following round types: Pre Seed, Seed, A, B, C, D, E, F, G Rounds, Convertible Debt, SAFE, Equity Crowdfunding, and Undisclosed rounds.

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Startup Nation Central is a free-acting NGO providing global solution seekers frictionless access to Israel’s bold and impatient innovators to help tackle the world’s most pressing challenges. Our free business engagement platform, Finder, grants unrestricted access to real-time, updated information and deep business insights into the Israeli tech ecosystem.