Opinion
Israel’s path to AI success: Focus on verticals where we have a comparative advantage
"Israel must act now. We need bold investment in AI infrastructure and a sharp focus on the verticals where we can lead," writes Lior Hanuka, CEO of HiCenter Ventures.
AI is redefining global power. Nations that design and implement decisive national AI strategies will take the lead. Five to ten years ago, Governments around the world recognized that the global economy was set to be reborn as an AI-driven economy. Therefore, each nation’s economic and competitive strength will depend on its ability to craft and execute a national AI strategy backed by investments of hundreds of billions of dollars.
The private sector has charged ahead and privately funded numerous AI initiatives, however, it has become clear that governments must increase their involvement in AI. Governments must develop & implement national AI strategies in order to successfully coordinate across sectors, advance adoption of AI nationwide, and demonstrate a unified effort.
The economic opportunity is immense: according to IDC, artificial intelligence is expected to add $19.9 trillion to global GDP. In 2025, venture capital investments in AI-based startups will reach $200 billion, representing 53% of total VC funding. In parallel, global organizational spending on AI infrastructure is growing rapidly, with annual increases of 63% year over year.
Israel stands at a critical crossroads when it comes to AI. The country must now focus its efforts on building long-term national infrastructure that will enable the development, deployment, and broad adoption of AI technologies across all sectors of the economy. This is a systemic endeavor that must combine physical infrastructure, human capital, research frameworks, and smart regulatory innovation.
Concerning infrastructure level, Israel must establish advanced national data centers with massive processing capacity, while offering significant incentives and energy discounts. Said policies should be similar to those already implemented in the EU and leading Asian nations such as South Korea, China, Singapore, and India. These data centers should serve as open infrastructure accessible to industry, academia, and the public sector; enabling a broad technological leap rather than isolated initiatives.
However, Israel can never compete with the massive budgets that other governments are investing in AI infrastructure and national programs (e.g. $300BB allocated by the U.S. government in 2024, $120BB by China, and $100B by Saudi Arabia). For comparison, the Nagel Commission in Israel recommended building AI farms with 60,000 NVIDIA processors; whereas the U.S. plans to establish farms with millions of processors, China with around 600,000, and Saudi Arabia with approximately 200,000. This gap is too wide to bridge through public funding alone, which is why Israel must adopt a hybrid strategy combining national infrastructure, private sector involvement, partnerships, and strategically targeted vertical leadership
To bridge this gap, the Israeli government should encourage leading global AI infrastructure companies such as CoreWeave, Crusoe, and Together.ai (which are building some of the world’s largest AI data farms), to expand operations in Israel and help strengthen the country’s AI backbone. The government should also offer benefits and incentives related to energy, regulation, and taxation.
Since Israel lacks the resources to become an AI infrastructure superpower, it must pursue a smart strategy focused on AI-driven verticals where it holds a comparative advantage. For example, Israel’s cybersecurity industry continues to lead global markets thanks to its rapid and effective adoption of AI technologies that outpace competitors. Another example is Vast Data, a pioneer in a new AI data management vertical. The recent intention by Google and NVIDIA to invest in the company at a valuation of $30B highlights the enormous economic potential in this space.
A new vertical is also emerging in Haifa, known as the “Blue Economy,” leveraging AI to transform the maritime sector; an industry estimated at $2.5 trillion globally. Supported by Haifa’s Maritime Policy and Strategy Institute (MPS), this initiative has already spawned over 30 startups developing AI technologies for ship and port management, fuel optimization, aquaculture solutions, renewable marine energy generation and storage and even ocean-based cooling systems for data centers. From this field, the next “Wiz” could emerge: a company solving critical challenges in the maritime economy.
To realize Israel’s AI potential, the number of engineers in electrical, electronic, computer, and exact sciences must be dramatically increased. New training programs should be launched in schools, colleges, and universities, alongside upgrading vocational education systems to align with a world where AI is integrated into nearly every profession.
In the field of research, it is pertinent for Israel to establish dedicated AI research institutes to attract leading Israeli scientists currently abroad and foster international collaborations with global centers of excellence. Research grants should be expanded across AI core domains; from machine learning and generative AI to specialized chips, energy-efficient algorithms, and issues of ethics, privacy, and cybersecurity.
The message is clear: Israel must act now. We need bold investment in AI infrastructure and a sharp focus on the verticals where we can lead. We’ve rewritten the rules before, and we can do it again — but the window won’t remain open for long. The choice is simple: lead the decade, or be led by it.
The author is CEO of HiCenter Ventures, a technology entrepreneurship and investment center based in Haifa.
