Strong shekel squeezes Israeli high-tech as AI reshapes the industry - opinion

The shekel's surge to levels unseen in decades, with the dollar falling to around NIS 2.8 in June, is squeezing Israeli high-tech companies that earn in dollars but pay expenses in shekels. Wix announced layoffs of 1,000 employees, about 20% of its workforce, citing the exchange rate. The government approved a NIS 1.6 billion assistance package for start-ups. The article argues the strong shekel, while a sign of economic strength, acts as a revenue cut for the tech sector, which accounts for nearly 20% of GDP and over 50% of exports.

The shekel's rise to levels not seen in decades is interpreted by markets as a vote of confidence in the Israeli economy, but for the high-tech sector, it acts as a sharp revenue cut. Over the past year, the dollar lost more than 20% of its value against the shekel, falling to around NIS 2.8 in June, the lowest since 1993. Israeli high-tech companies sell primarily abroad, earning in dollars, while most expenses are in shekels. A company that raised $100 million a year ago could cover NIS 360 million in expenses; today only NIS 300 million. Wix, a symbol of Israeli success, announced it would dismiss 1,000 employees, about 20% of its workforce, citing that a significant share of expenses is in shekels while revenues are in dollars. High tech accounts for nearly 20% of Israel's GDP and over 50% of exports. The government approved a NIS 1.6 billion assistance package for start-ups, with about NIS 1 billion for rapid support, aimed at companies with runway of one year or less. Since June, amid security tensions, the dollar has returned above NIS 3, but remains roughly 15% below its level a year ago. The article argues the government should not fight a trend reflecting a strong economy but aims to smooth the transition.