On the Edge of Innovation and Isolation: Israel’s Future in the Chip Wars

Geopolitical risks are threatening Israel's start-up nation status.

In an effort to maintain US dominance and curb China’s influence in the chip industry, the Biden administration introduced the ‘Interim Final Rule on Artificial Intelligence Diffusion’, aimed at restricting the export of advanced computer chips necessary for artificial intelligence (AI) production. The new framework has faced intense criticism from industry leaders like NVIDIA and Oracle, who have called the move a ‘sweeping overreach’ that could, respectively, hand over ‘most of the global AI and GPU market’ to Chinese competitors. Israel, a major tech leader whose economy relies on technology exports for around 15% of its GDP, is among the countries affected by such regulations, which have both benefited and hindered it in the past. It will now face restrictions on access to critical chips and non-open code AI models, potentially limiting its ability to remain competitive in AI and other high-tech sectors.

Hot and Cold: Israel’s Tech Dilemma