The Israeli technology industry has undergone deep change in recent years. If in the past it was mostly software, cybersecurity, and Internet companies that grabbed attention, today the center of gravity is shifting to microprocessors, AI infrastructure, advanced networking systems, and defense electronics. A new report from placement company Ethosia presents a picture of a sector that is growing, but that is also under increasing pressure because of a shortage of experienced engineers with specialized training.

The report is based on a combination of several sources of information, among them in-depth questionnaires completed by 63 companies in semiconductors, medical devices, and defense, and multidisciplinary companies, together employing over 45,000 people. In addition, it derives from figures from public companies, and data gathering and analysis by Ethosia.

One of the figures that stands out in the report provides an insight into the situation at Intel. The company, which for years was the largest and most influential employer in the sector, has recorded a substantial decline in its workforce, after hundreds of workers took voluntary retirement (over 11%). During the term of the previous CEO, Pat Gelsinger, a voluntary retirement program was introduced, in which thousands of workers were offered the possibility of leaving in exchange for a grant calculated according to length of service, seniority, and position.

Hundreds of employees in Israel agreed to accept the grant. Some of them received it even though they had already found work at other companies or were in the process of doing so. Intel’s current CEO, Lip-Bu Tan, restricted the procedure to very senior employees, and introduced a program of unilateral layoffs that was mostly completed last year.

Joining Nvidia

As "Globes" reported, the largest single group of former Intel employees last year joined Nvidia, an unsurprising development given the technological similarity between the two companies, both of them developers of semiconductors, particularly core chips for server farms and computers.

In a little less than a year since Tan took over at Intel, the company’s global workforce has shrunk dramatically, in accordance with the spirit of the new leadership. From a company of 109,000 people it had fallen to 85,000 by the end of the first quarter of this year.

At its peak, Intel Israel employed about 12,000 people at its development centers in Haifa, Petah Tikva and Jerusalem and at its fab in Kiryat Gat. According to LinkedIn, its workforce has declined by 30% to just 8,000 today. That was about the size of Intel Israel’s workforce in 2012, but since then it has acquired three Israeli companies for billions of dollars: Mobileye, Habana Labs, and Granulate.

Intel stated in response: "The reference period included a voluntary retirement program, and so the figure cannot be regarded as a simple measure of normal leaving patterns. It also does not reflect the considerable technological and business progress of which Intel is currently in the midst."

The report also states that some 34,400 people in Israel are employed in the areas of engineering and hardware that were examined. Despite the high number, companies struggle to find the manpower required for continued growth. Demand is concentrated on a fairly small group of experts in chip architecture, AI hardware, RFIC (radio-frequency integrated circuits), physical design, and mixed signal systems.

Competing for the same workers

The battle lines in the competition for workers have also changed. In the past, Intel, Marvell, Qualcomm, and Apple mainly competed with other chip companies. Today, the situation is quite different. Defense companies Rafael, Elbit Systems, and Israel Aerospace Industries compete for exactly the same people. The result is that the three main engines of growth in the Israeli economy today, chips, AI, and defense, are competing over the same limited pool of workers.

In addition, the report indicates a change in the balance of forces within the chip industry itself. Nvidia continues to establish itself as one of the most dominant employers in hardware in Israel. The company’s workforce in the country grew by 24.4% last year, and it has 417 job vacancies. The demand for workers is mainly fueled by the AI race.

The chronic shortage of workers in demand has dramatical lengthened the time it takes to recruit. Filling a senior job these days can take five to seven months. For many companies it is no longer a matter of an operational difficulty but a real obstacle to the business.

The growing demand is also having an impact on pay structures in the sector. Chip and system architects earn the highest salaries, over NIS 100,000 monthly in some cases.

The report also provides an insight into churn rates at leading companies. The proportion of employees who leave voluntarily is an important measure of job satisfaction, stability of the enterprise, and the ability to retain talent. There are considerable differences between the companies. Intel has the highest employee churn rate, at 11.2%, followed by Mobileye with 10.2%. Samsung and Rafael also have high rates, of over 8%. At Nvidia, on the other hand, the rate is just 1.5%, and at Broadcom it is 0.8%, among the lowest rates in the report.

Companies that can offer projects at the cutting edge of technology, a clear career horizon, and attractive compensation packages, enjoy a substantial advantage in the struggle to attract talent. Those in a period of restructuring or that are falling behind in the technological race find it harder to retain their experienced employees.

In fact, one of the chief messages of the report is that the manpower shortage has become a national issue. If in the past the ability of companies to grow depended mainly on access to capital and customer demand, today the ability to recruit and retain experienced hardware engineers has become a decisive factor.

Ethosia also warns that all the indicators point to the situation becoming worse in 2027, when the demand for senior engineers will continue to grow faster than the supply of graduates and experienced employees in the critical fields.

In the end, the most important fact that emerges from the report is not the number of job vacancies or pay levels, but the realization that human capital has become the most important strategic resource in the hardware industry. In a period in which semiconductor, AI, and defense companies are investing billions of dollars in new technologies, the question is not who will develop the next product, but who will succeed in recruiting and retaining the people who will build it.

Published by Globes, Israel business news - en.globes.co.il - on June 10, 2026.

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