The wave of layoffs that has shaken Israel’s vaunted tech industry in recent weeks has sparked fears that artificial intelligence is curbing hiring and replacing jobs in the workplace. However, a survey published Tuesday indicated that AI is not a harbinger of the demise of the sector, but it is driving a shift in focus.

The survey by the Israel Innovation Authority found that despite widespread job cut announcements, the overall number of tech employees in the first half of the year remained largely stable.

But while the overall number of jobs was unaffected, an analysis of the High-Tech Employment survey points to stark sectoral divides, with hiring and layoff rates varying widely across the industry.

Software companies continue to cut their workforce and lower costs amid rapid AI advances, while hardware, chip, and deep-tech companies continue to expand and hire at a faster rate.

In late July, Israeli workplace software company Monday.com announced plans to cut as many as 620 employees, or 20% of its workforce, as it remodels its strategy and operations to adapt to the era of artificial intelligence and automation.

“We are seeing a clear divide between software sectors, which are undergoing significant adjustments in response to technological changes and the adoption of artificial intelligence, and deep-tech fields, including semiconductors, computing infrastructure, defense technologies, and others, which continue to demonstrate strong demand for employees and serve as significant engines of growth,” said Israel Innovation Authority CEO Dror Bin. “We are not seeing a high-tech industry that is weakening, but one that is changing rapidly.”

“We already understand that the story of 2026 is not how many employees are being laid off, but which skills the market is seeking,” Bin remarked.

The IIA, together with consulting firm Zviran, conducted the employment survey in the second half of June 2026 among 210 tech companies representing about 130,000 workers. The survey reflects trends among companies with more than........

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