Is AI Splitting High-Tech Industry in Two? Here's What Report Says
Israel high-tech employment remains stable overall, but structural shifts are under way. According to a Calcalist report, software firms face rising layoffs due to AI integration, while hardware and deep-tech companies continue expanding, marking a profound transformation in the local technology labor market.
Recent headlines highlighting workforce reductions across Israel have sparked concerns about a deepening crisis in the local technology industry. However, comprehensive macro data indicates that overall sector employment remains stable, driven by a structural transformation rather than a broad downturn.
As per a report by Calcalist, a recent survey conducted by the Israel Innovation Authority and Zviran reveals a growing divide within the market. While traditional software companies are implementing efficiency measures and reducing headcount due to artificial intelligence adoption, hardware, chip, and deep-tech firms continue to expand rapidly. Meet Henry Chen: A DJ-Turned-Engineer Shares Shock Over Unexpected Layoff After 13 Years at Meta.
Software Layoffs and the Artificial Intelligence Divide
The most pronounced divergence in the survey exists between software and hardware sectors, where software companies recorded a layoff rate of 6.6 percent during the first half of the year. This figure is more than double the industry-wide average, reflecting intense competitive pressures and the integration of artificial intelligence tools.
Conversely, hardware firms reported a minimal layoff rate of just 1.1 percent. The surge in global demand for physical computing infrastructure, advanced chips, and semiconductor systems required to power modern artificial intelligence models has fueled continuous hiring in these hardware-focused domains.
Medium-Sized Layoffs and Macroeconomic Pressures
Company size and currency fluctuations also significantly influence current workforce adjustments across the ecosystem. Medium-sized enterprises employing between 50 and 200 workers experienced the highest layoffs, reaching 8.7 percent. These firms face acute cash flow pressures alongside challenges from a strengthening shekel. FedEx Layoffs: Logistics Giant Closes Hundreds of Facilities Under Network 2.0 Restructuring, Says Report.
Because many local firms generate revenues in foreign currencies while maintaining local operational expenses, currency valuations have impacted hiring strategies. Approximately 17.6 percent of companies executing broad layoffs cited unfavorable exchange rates as a direct factor in their workforce decisions.
(The above story first appeared on LatestLY on Aug 11, 2026 02:56 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
