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The global arms industry has experienced significant growth, reaching unprecedented revenue levels of $679 billion, according to a report by the Stockholm International Peace Research Institute (SIPRI). This represents a 5.9 percent increase compared to previous figures, driven by ongoing conflicts such as those in Gaza and Ukraine, along with escalating military expenditures amid geopolitical tensions.
The surge in profits has primarily occurred within companies based in Europe and the United States. SIPRI’s report indicates that all regions, except Asia and Oceania, have seen revenue growth. The downturn in these latter regions is attributed to challenges faced by the Chinese arms sector, resulting in a decline in overall revenue.
Leading manufacturers and regional performances
Among the major players, Lockheed Martin, Northrop Grumman, and General Dynamics have solidified their positions in the U.S. arms market, collectively generating $334 billion in sales. This reflects a 3.8 percent increase from previous figures, with 30 out of 39 listed American companies reporting revenue growth.
Despite this upward trajectory, SIPRI has noted delays and budget overruns in key projects such as the F-35 fighter jet and various submarine programs, indicating persistent issues within the industry.
Emerging players and notable growth
In a notable development, SpaceX, founded by Elon Musk, has entered the ranks of top military manufacturers, reporting a remarkable increase in arms revenues that more than doubled to $1.8 billion. This underscores the growing influence of private companies in the military sector.
European arms manufacturers have also demonstrated robust growth, with 26 companies in the top 100, 23 of which reported increased revenues. Collectively, their arms revenues rose by 13 percent to $151 billion. The Czech company Czechoslovak Group achieved the highest percentage growth, with a remarkable 193 percent increase, largely due to the production of artillery shells for Ukraine.
Regional challenges and dynamics
As Ukraine continues to resist a sustained Russian offensive, its domestic arms industry, represented by JSC Ukrainian Defense Industry, has seen a 41 percent increase in revenues, reaching $3 billion. This reflects ongoing demand for military equipment amid the conflict.
However, SIPRI warns that while European arms companies ramp up production capabilities in response to conflict, they face challenges in sourcing essential materials, particularly critical minerals, as China tightens its export controls.
Mixed fortunes in Asia and the Middle East
The situation in Asia and Oceania presents a more complex picture. Despite generating $130 billion in revenues, there has been a 1.2 percent decline largely due to significant drops among Chinese manufacturers, particularly NORINCO, which saw a 31 percent decrease. Allegations of corruption have resulted in delays or cancellations of major contracts, casting uncertainty over China’s military modernization.
In contrast, arms manufacturers from Japan and South Korea have prospered, with combined revenues rising due to increased demand from both domestic and European markets amid rising tensions regarding Taiwan and North Korea. Companies from the Middle East, particularly in the UAE, have also reported growing revenues, although specific figures for the EDGE Group were not included due to lack of data.
The surge in profits has primarily occurred within companies based in Europe and the United States. SIPRI’s report indicates that all regions, except Asia and Oceania, have seen revenue growth. The downturn in these latter regions is attributed to challenges faced by the Chinese arms sector, resulting in a decline in overall revenue.0
Industry outlook: navigating challenges
The surge in profits has primarily occurred within companies based in Europe and the United States. SIPRI’s report indicates that all regions, except Asia and Oceania, have seen revenue growth. The downturn in these latter regions is attributed to challenges faced by the Chinese arms sector, resulting in a decline in overall revenue.1