Israel did use to build fighter jets. It built the Kfir. It planned to build a next gen airplane (The Lavi) but was pressured by the US to cancel that plan and instead buy F16s. The US also affects control of what Israeli weapons systems can be sold to who. Presumably part of the agreement to cancel the Lavi project was some sort of US commitment to supply Israel instead.

https://en.wikipedia.org/wiki/IAI_Lavi