Germany and Israel Deepen Defense-Tech Ties with New Cooperation Agreement

Germany’s Minister for Economic Affairs, Katherina Reiche, signed last week a memorandum of understanding (MoU) during an official visit to Israel aimed at strengthening cooperation in the defense-tech sector. The agreement focuses on fostering innovation, technology transfer, and closer ties between Israeli startups and German industry. The MoU was also signed by Aharon Appelbaum of Israeli defense-tech investment fund Kinetica and Michael Wöltz, founder of the German startup incubator SouthWestX. As part of the initiative, a “Startup Leaders” program will be launched to facilitate knowledge exchange, business connections, and joint projects between companies in both countries.

Kinetica is an Israeli investment fund specializing in defense-tech and dual-use technologies, operating at the intersection of security, advanced industry, and artificial intelligence. Beyond capital investment, the fund emphasizes strategic guidance, access to international markets, and partnerships with global corporations and defense organizations. Its activity reflects the growing global momentum in defense-tech, driven by rising demand for solutions in areas such as autonomy, sensing, cybersecurity, and advanced defense systems.

SouthWestX, for its part, is a German innovation hub and startup incubator focused on connecting technology ecosystems across Europe, Israel, and the United States, with an emphasis on strategic industries including defense, aerospace, energy, and smart manufacturing. Based in southwestern Germany—an area known for its strong industrial and defense manufacturing base—the incubator acts as a bridge between early-stage startups and large corporations, research institutions, and government bodies. The partnership with Kinetica is designed to leverage Israel’s innovation capabilities alongside Germany’s industrial infrastructure, regulatory framework, and market access.

Reiche’s visit also carried clear security and geopolitical significance. She was accompanied by an unusually large delegation of senior executives from Germany’s defense industry, signaling a renewed strengthening of defense relations between Berlin and Jerusalem after a period of strain. Tensions peaked in August, when the German government under Chancellor Friedrich Merz imposed a partial arms embargo on Israel over disagreements related to the fighting in Gaza. The embargo was lifted in recent weeks, and around the same time Germany operationally deployed the Arrow 3 air defense system purchased from Israel—a strategically significant move, albeit one that was not accompanied by high-profile public political appearances.

Overall, the newly signed MoU reflects a dual track of technological and entrepreneurial cooperation alongside a clear political and security signal, positioning defense-tech as a central pillar in the deepening relationship between Germany and Israel in the years ahead.

3d Signals expands its presence in Germany

Photo above: Installing 3d Signals’ sensor in a production line. The digitization begins with data collection

The Kfar Saba-based (near Tel Aviv) 3d Signals, which has developed a solution for digitalization, monitoring and analytics of manufacturing machines, has reported that since the beginning of 2020 it had increased its installing base in Europe, and especially in Germany. Germany’s industrial sector is prominent in the production of heavy machinery, automotive, electronics, engineering and chemicals – and is ideal candidate for 3d Signals’ solutions.

The German industry constitutes the company’s main target market, where it is active via a local subsidiary located in the Frankfurt area. 3d Signals’ VP of Marketing, Danya Golan, told Techtime that COVID-19 crisis strongly affected business continuity in many factories, who urgently needed remote managing capabilities. “During the crisis, we have generated new customers in Europe and are providing them with online support,” she said.

The pilot program led to a new direction

3d Signals was founded in 2015 and has raised $26 million to date. The company was recently selected to participate in the prestigious Technology Pioneers program of the World Economic Forum. It started by developing a platform for forecasting malfunctions in industrial machines, based on external acoustic sensors. The solution aroused great interest in the industry, but a pilot program with industrial partners proved to be a disappointment: The insights it had produced gave only limited value to the production managers.

Danya Golan, VP of Marketing at 3d Signals
Danya Golan, VP of Marketing at 3d Signals

Danya: “Predictive maintenance is today a big buzz in the industry, but sometime the value of these tools is quite limited. Our system, for example, knew which component was going to break down in which machine. It was very impressive, but it did not contribute much to the ongoing operation of the entire production line”.

Following lessons learned, the company recalculated its vision, and transformed itself from sensor-oriented to system-oriented provider. It abandoned the focus on acoustic sensors and malfunction prediction, and adopted a digital approach to allow factories to transform themselves from “stupid” factories to “smart” ones; a system suitable for any production machine, regardless of model or role of its independent units.

The “Smart Factory” is not so smart

The term ‘Industry 4.0’ has been around for several years, but is far from being wide spread. According to Cisco, less than 10% of the tens of millions of manufacturing machines in the world are connected to a communications network. “Without digitization, there is no basic infrastructure that allows for visibility, and there’s no data to operate Artificial Intelligence and Deep Learning algorithms or any other kind of analytics.”

Unlike other solutions in the market, than can be very costly and complex, 3d Signals works with an unobtrusive platform based on external sensors which are easy to operate and to install. In fact, it takes less than an hour to complete a full connection of an industrial main machine. “Even basic information is sufficient to make a significant change. We monitor the machines from the outside by using sensors such as a current transformer or an acoustic sensor, to learn whether or not the machine is functioning.

“Within 48 hours of the installation, there is a unified monitoring dashboard for the entire factory. Today our technology is focused on the algorithms and presentation of information in such a way that both the CEO and the floor manager can understand. Our data shows that our customers had improved their output by 30% within 3 months of launching the platform.”

The screen shows 3d Signals' analytics in the production floor
The screen shows 3d Signals’ analytics in the production floor