Israel Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in israel, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Information Communication Technology ICT
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Overview 

Israel’s information and communication technology (ICT) developments were initially fueled by geopolitical needs. Defense-related research and development (R&D) had a significant impact on the start of Israel’s industrial sector, the higher educational system in the areas of science and engineering, the research community, and the structure of the ICT industry work force. 

The government invested significant funding to develop defense-oriented equipment and capabilities. Demand for highly skilled workers, scientists, and engineers affected public resources allocated to universities and research institutions. However, not all investment in this area stem from the defense sector. As of 2025, Israel hosts over 400 R&D centers operated by multinational companies. American companies constitute about 55% of all R&D centers in the country. Corporations such as Intel, IBM, Google, Cisco, Motorola, Philips, Apple, Microsoft, NVIDIA and many others have invested and set up research centers in Israel to take advantage of the local talent.  

Israel remains the global leader in R&D intensity, investing about 6.3% of its GDP in 2023, more than double the OECD average of under 3%. It also consistently ranks second worldwide in venture capital funding per capita, just behind Singapore.Israel’s ICT market continues to exhibit robust growth and strategic importance. In 2024, the market was valued at approximately USD 52.39 billion, and it’s expected to rise to USD 54.22 billion in 2025, growing at an annual growth rate (CAGR) of around 3.37%, reaching USD 63.99 billion by 2030. While the regional conflict has created near-term uncertainties, including workforce mobilization, capital flow disruptions, and pressures on foreign investment, the sector has proven highly resilient. Demand for cloud services, AI applications, and advanced cybersecurity has, in fact, accelerated due to increased security needs.

Overall, Israel’s skill in IT, software, and internet technologies solidifies its status as a key global digital player. This is reinforced by the fact that high-tech including software and ICT accounts for approximately 18% of GDP and contributes 35% of income tax revenue, even though it employs only about 10% of the workforce.

Leading Sub-Sectors 

Software 

The United States remains Israel’s top source for software and IT equipment and services, Israel has indeed emerged as a significant player in the digital world, particularly in the realms of IT, software, and the internet. The Israeli software market has experienced remarkable growth, expanding by nearly 400% in the past decade. 

Israeli software now powers a range of global industries, from PC motherboard chips to smartphones, playing a critical role across business, consumer, and technical applications worldwide. More than 100 Israeli software companies are active in cloud computing and internet-based services, which are widely considered to be the next frontier in the IT market.

Israel holds notable strengths in organizational software, fintech, and cybersecurity. These sectors offer substantial comparative advantages for the country’s tech industry. 

Furthermore, these industries account for more than 40% of new businesses founded each year in Israel and draw more than half of all investments, majority focused on this sector..  Israel’s expertise in IT, software, and the internet underscores its position as a key player in the worldwide digital landscape. The country’s innovative contributions continue to shape and propel advancements in these industries globally. 

Telecommunication  

Israel’s telecommunication market is characterized by high mobile penetration and a significant number of service providers including Bezeq International, Pelephone, HOT Mobile, Cellcom, 013 NetVision, Partner, 012 Smile, Golan Telecom, Rami Levi Telecom, and others. Israel’s telecommunication network is one of the most sophisticated in the world.  

As of mid-2025, the 2G and 3G networks have been fully phased out, with devices lacking 4G or 5G support will be unable to connect as of early 2026. This decisive transition has opened valuable spectrum and facilitated the broader expansion of 4G and 5G networks.

Israel continues to strengthen its position as a leader in 5G cellular innovation. The Ministry of Communications has not only invested in early-stage pilot programs, such as the $6.6 million allocated in previous years to support new 5G applications, but is now backing nationwide expansion through fiber rollouts, regulatory reforms, and industry partnerships. Major operators like Pelephone and Cellcom have achieved over 80% 5G coverage and launched dedicated 5G-only service plans, demonstrating rapid adoption. These efforts underscore Israel’s long-term commitment to fostering new 5G-based innovations in areas such as smart mobility, connected healthcare, and industrial IoT. 

On the fiber-optic front, Israeli-based Bezeq has seen positive developments. In Q1 2025, it reported a 7% increase in net profit of approximately USD 91 million, driven by a 36% surge in fiber subscribers, totaling 885,000. The company remains on track to reach 2.9 million households by the end of 2025, up from 2.7 million. More importantly, regulatory reforms are set to reduce fiber wholesale costs by over 30%, boosting competition and affordability. 

As Israel expands its fiber and 5G networks, additional prospects are emerging in smart cities, digital healthcare, and connected transportation, where U.S. firms can provide advanced cybersecurity, edge computing, and telecom software solutions.

Additional opportunities are expected to arise as the 5G network expands, in areas such as smart cities, transportation, digital hospitals, and industry production and manufacturing.  

Artificial Intelligence (AI) 

Please see the Digital Economy chapter of the Country Commercial Guide for a more detailed analysis on Artificial Intelligence within the Israeli economy.

Cloud Computing  

Cloud computing has gained wide adoption among ICT market vendors, providing numerous benefits for application development, testing, resource management, data storage, backup, and orchestration services. This technology is being embraced across various sectors in Israel, including IT and telecom, healthcare, Banking Financial and Insurance (BFSI), manufacturing, retail, media, and entertainment. 

A central milestone was the government-led Project Nimbus, a $1.2 billion contract signed in 2021 with Amazon and Google to establish secure, localized cloud infrastructure for the public sector and military. The project features local data centers and supports AI and machine learning workloads while keeping data within Israel’s borders. 

In parallel, Microsoft launched its first Azure region in Israel in 2024, offering enterprise-grade cloud solutions through local infrastructure. These developments underscore the growing demand for scalable, compliant, and locally hosted cloud services.

The BFSI sector has witnessed increased deployment of cloud-based services for secure payment gateways. Similarly, healthcare providers and manufacturers are increasingly shifting workloads to the cloud to support innovation, data analytics, and IoT integration. Industry analysts project that Israel’s cloud computing market will grow steadily through 2030, driven by demand for AI, cybersecurity, and advanced data services layered on top of cloud platforms. 

Opportunities exist for U.S. companies to offer advanced cloud services, cybersecurity solutions, AI applications, and data management tools that support Israel’s expanding cloud infrastructure and growing demand across sectors such as finance, healthcare, and manufacturing

Opportunities 

There is a growing appetite among businesses and individuals in Israel to explore and adopt digital technologies, driven by the pursuit of efficiency, innovation, and enhanced customer experiences.

The telecommunications market offers opportunities in network equipment, fiber connectivity, IoT devices, and telecom software, as Israel accelerates its nationwide 5G and fiber rollout. Demand is also rising for smart city solutions, digital healthcare platforms, connected transportation, and advanced cybersecurity tools tied to next-generation connectivity. 
Cloud computing is another area of rapid expansion, with opportunities for U.S. companies to provide cloud services, AI-driven applications, data management solutions, and security technologies that can support growth across key sectors such as finance, healthcare, and manufacturing.

Overall, Israel’s commitment to digital transformation, combined with its high innovation capacity, creates sustained opportunities for U.S. companies to partner and supply technologies that reinforce one of the world’s most dynamic ICT markets.

Resources 

  • Ministry of Communication  
  • Israel Advanced Technology Industries
  • Israel Innovation Authority
  • Startup Nation Central
  • Trade Policy Information System (TPIS) 
     

Local trade shows: 

  • CyberTech Tel Aviv – January 26-28, 2026
  • AI Week – December 10-11,2025
  • Cyber Week – December 8-11, 2025 
     

For more information, please contact Commercial Specialist Christina Azar at Christina.Azar@trade.gov.

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