Production abroad, led by Nvidia, is becoming a significant driver of Israel’s GDP growth

ISRAEL - In Brief 21 Aug 2026 by Sani Ziv
The release of the Q2 national accounts has renewed the discussion over the growing impact of production abroad by Israeli companies on Israel’s GDP, and particularly the contribution of Mellanox, acquired by Nvidia in 2020, to recent GDP growth. The discussion intensified after the CBS began publishing estimates of GDP both including and excluding production abroad by Israeli companies. According to the latest estimates, the GDP grew by 3.5% in 2025, compared with 2.1% excluding production abroad. In Q2 2026, the GDP increased by 15.4% annually, compared with 14.4% excluding production abroad. The effect is even more pronounced in exports, which increased by an annualized 35.2%, compared with 23.0% excluding production abroad. The chart below shows quarterly GDP with and without production abroad (NIS bn, left axis), together with production abroad (NIS bn) and Nvidia’s quarterly net income (USD bn, right axis). The sharp increase in production abroad since 2025 coincides with the surge in Nvidia’s profitability.Israel’s quarterly GDP, production abroad and Nvidia net incomeGDP (NIS bn, left axis); production abroad contribution (NIS bn) and Nvidia net income (USD bn), right axisSource: CBS, Macrotrends (Nvidia) and author’s calculations.The economic source of the GDP generated for the Israeli economy from production abroad is the difference between the sale value of the product and the cost of production and intermediate inputs purchased abroad. Under national accounting rules, economic activity is attributed according to the principle of economic ownership rather than the physical location of production. Under BPM6 (paragraphs 10.62-10.71), when an Israeli resident ...

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