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IAI began in 1933 as a small machine shop, later catering to the maintenance and upgrading of the motley collection of aircraft acquired during the War of Independence. It continued to specialize in the overhaul and retrofitting of the whole range of aircraft in the air force inventory. Israel Aircraft Industries was established in 1953 as Bedek Aviation Company, five years after the establishment of the State of Israel.

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"IAI and Rafael are business companies and the largest exporters in the economy, with IAI exporting $10 billion a year, 80% of its output, and Rafael exporting 50% of its output. The global trend is towards mergers, and the industry is becoming a field for giants. IAI is a national focus of know-how in radar, outer space, unmanned aerial vehicles, aviation, and missiles. Rafael is also a national focus in missiles,"

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

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