World’s Top Arms Producers see Revenues rise on the Back Of Wars and Regional Tensions

#Stockholm, December 2nd, 2024

#Revenues from sales of #arms and #military services by the 100 largest companies in the industry reached 632 billion dollars in 2023, a real terms increase of 4.2 per cent compared with 2022, according to new data released today by the Stockholm #International #Peace #Research #Institute (SIPRI), available onlineExternal Link. Accurate, dependable information is more important than ever. Invest in the facts. Support #SIPRI.

Arms revenue increases were seen in all regions, with particularly sharp rises among companies based in Russia and the Middle East. Overall, smaller producers were more efficient at responding to new demand linked to the wars in Gaza and Ukraine, growing tensions in East Asia and rearmament programmes elsewhere.

SIPRI Top 100 companies ramp up production and build workforces

In 2023 many arms producers ramped up their production in response to surging demand. The total arms revenues of the Top 100 bounced back after a dip in 2022. Almost three quarters of companies increased their arms revenues year on year. Notably, most of the companies that increased their revenues were in the lower half of the Top 100.

«There was a marked rise in arms revenues in 2023, and this is likely to continue in 2024«, said Lorenzo Scarazzato, a Researcher with the SIPRI Military Expenditure and Arms Production Programme. «The arms revenues of the Top 100 arms producers still did not fully reflect the scale of demand, and many companies have launched recruitment drives, suggesting they are optimistic about future sales.«

US companies’ arms revenues rise, but production challenges remain

The 41 companies in the Top 100 based in the United States recorded arms revenues of 317 billion dollars, half the total arms revenues of the Top 100 and 2.5 per cent more than in 2022. Since 2018, the top five companies in the Top 100 have all been based in the USA.

Of the 41 US companies, 30 increased their arms revenues in 2023. However, #Lockheed #Martin and RTX, the world’s two largest arms producers, were among those registering a drop.

«Larger companies like Lockheed Martin and RTX manufacturing a wide range of arms products often depend on complex, multi tiered supply chains, which made them vulnerable to lingering supply chain challenges in 2023«, said Dr Nan Tian, Director of SIPRI’s Military Expenditure and Arms Production Programme. «This was particularly the case in the aeronautics and missile sectors.«

European arms industry trails rest of world in revenue growth

The combined arms revenues of the 27 Top 100 companies based in Europe (excluding Russia) totalled 133 dollars billion in 2023. This was only 0.2 per cent more than in 2022, the smallest increase in any world region.

However, behind the low growth figure the picture is more nuanced. European arms companies producing complex weapon systems were mostly working on older contracts during 2023 and their revenues for the year consequently do not reflect the influx of orders.

«Complex weapon systems have longer lead times«, said Lorenzo Scarazzato. «Companies that produce them are thus inherently slower in reacting to changes in demand. That explains why their arms revenues were relatively low in 2023, despite a surge in new orders.«

At the same time, a number of other European producers saw their arms revenues grow substantially, driven by demand linked to the war in Ukraine, particularly for ammunition, artillery and air defence and land systems. Notably, companies in Germany, Sweden, Ukraine, Poland, Norway and Czechia were able to tap into this demand. For instance, Germany’s Rheinmetall increased production capacity of 155 millimetres ammunition and its revenues were boosted by deliveries of its Leopard tanks and new orders, including through war related «ring exchange« programmes (under which countries supply military goods to Ukraine and receive replacements from allies).

Wartime production leads to sharp rise in Russian firms’ arms revenues

The two Russian companies listed in the Top 100 saw their combined revenues increase by 40 per cent to reach an estimated 25.5 billion dollars. This was almost entirely due to the 49 per cent increase in arms revenues recorded by Rostec, a state owned holding company controlling many arms producers, including seven previously listed in the Top 100 for which individual revenue data could not be obtained.

“Official data on Russian arms production is scarce and questionable but most analysts believe that the production of new military equipment increased substantially in 2023, while Russia’s existing arsenal underwent extensive refurbishment and modernization”, said Dr Nan Tian. “In particular, combat aircraft, helicopters, UAVs, tanks, munitions and missiles are all thought to have been produced in greater numbers as Russia continued its offensive in #Ukraine.”

South Korean and Japanese companies lead revenue growth in Asia and Oceania

The 23 companies in the Top 100 based in Asia and Oceania recorded 5.7 per cent arms revenue growth year on year, to reach 136 billion dollars. The four South Korea based companies recorded a combined 39 per cent increase in arms revenues to reach 11.0 billion dollars. The five companies based in Japan saw their combined arms revenues rise by 35 per cent to 10.0 billion dollars. A policy of military build up in Japan since 2022 drove a flurry of domestic orders, with some companies seeing the value of new orders increase more than 300 per cent.

“The sharp growth in arms revenues among South Korean and Japanese companies reflects the bigger picture of military build ups taking place in the region in response to heightened threat perceptions”, said Xiao Liang, a Researcher with the SIPRI Military Expenditure and Arms Production Programme. “South Korean firms are also trying to expand their share of the global arms market, including demand in Europe related to the war in Ukraine.”

Middle East arms producers see revenue growth linked to #Gaza, #Ukraine conflicts

Six of the Top 100 arms companies were based in the Middle East. Their combined arms revenues grew by 18 per cent to 19.6 billion dollars. With the outbreak of war in Gaza, the arms revenues of the three companies based in Israel in the Top 100 reached 13.6 billion dollars. This was the highest figure ever recorded by Israeli companies in the SIPRI Top 100. The three companies based in Türkiye saw their arms revenues grow by 24 per cent to 6.0 billion dollars, benefiting from exports prompted by the war in Ukraine and from the Turkish government’s continued push towards self reliance in arms production.

“The biggest Middle Eastern arms producers in the Top 100 saw their arms revenues reach unprecedented heights in 2023 and the growth looks set to continue”, said Dr Diego Lopes da Silva, Senior Researcher with the SIPRI Military Expenditure and Arms Production Programme. “In particular, as well as taking in record arms revenues in 2023, Israeli arms producers are booking many more orders as the war in Gaza rages on and spreads.”

Other notable developments

The nine companies in the Top 100 based in #China saw their smallest year on year percentage increase in arms revenues (plus 0.7 per cent) since 2019 amid a slowing economy. Their total arms revenues in 2023 reached 103 billion dollars.

The combined arms revenues of the three Indian companies in the Top 100 increased to $6.7 billion (plus 5.8 per cent).

NCSIST, the only Taiwan based company in the Top 100, recorded a 27 per cent increase in its arms revenues to 3.2 billion dollars.

Türkiye’s Baykar produces armed uncrewed aerial vehicles (UAVs) that have been widely used in the war in Ukraine. Exports accounted for around 90 per cent of its arms revenues in 2023, which increased by 25 per cent over the year to 1.9 billion dollars.

The United Kingdom’s Atomic Weapons Establishment, which designs, manufactures and maintains nuclear warheads, recorded the largest year on year percentage increase in arms revenues (plus 16 per cent) among UK companies in the Top 100, to reach 2.2 billion dollars.