Global arms sector revenues rose sharply in 2024, driven by demand generated by the wars in Ukraine and Gaza, global and regional geopolitical tensions, and increasing military spending. For the first time since 2018, all five largest companies in the sector recorded an increase in revenue, according to data released this Monday, December 1, by the Stockholm International Peace Research Institute (SIPRI). An increase that led many companies in the sector to expand production lines, establish new subsidiaries or make acquisitions.
Although most of the growth was driven by companies based in Europe and the United States, annual increases were recorded in all regions of the world present in the ranking of the 100 largest, with the exception of Asia and Oceania, due to problems in Chinese industry.
“Last year, global arms revenues reached the highest level ever recorded by SIPRI, as producers capitalized on high demand,” said Lorenzo Scarazzato, researcher at SIPRI’s Military Expenditure and Armament Production Program, in a statement. “Although companies have increased their production capacity, they still face a series of challenges that can affect costs and delivery times.”
USA with budget delays and overruns
Last year, the combined revenues of the US companies in the top 100 grew 3.8% to $334 billion, with 30 of the 39 US companies in the top 100. ranking to register an increase in their revenues. Among them, large weapons producers such as Lockheed Martin, Northrop Grumman and General Dynamics. However, delays and budget overruns continue to affect the development and production of important US-led programs such as the F-35, the Columbia-class submarine and the Sentinel intercontinental ballistic missile.
“Delays and increased costs will inevitably impact US military planning and military spending”, notes Xiao Liang, researcher in the same SIPRI program. “This could have knock-on effects on the US government’s efforts to cut excessive military spending and improve budgetary efficiency.”
It should also be noted that Elon Musk’s SpaceX entered the top 100, after its armaments revenues more than doubled compared to 2023, reaching 1.8 billion dollars.
Rearmament underway in Europe
Of the 26 armaments companies among the 100 largest based in Europe (excluding Russia), 23 saw an increase in armaments revenue – 13%, reaching 151 billion dollars – linked to demand due to the war in Ukraine and the threat from Russia.
Highlight is the Czech company Czechoslovak Group, which recorded the highest percentage increase in armaments revenue among the 100 largest companies in 2024: 193%, reaching 3.6 billion dollars, and which is attributed a large part of its revenue to Ukraine. JSC Ukrainian Defense Industry, from Ukraine, increased its revenues by 41%, to 3 billion dollars.
“European arms companies are investing in new production capacity to meet growing demand”, says Jade Guiberteau Ricard, researcher at SIPRI. “But the supply of materials may pose an increasing challenge. In particular, dependence on critical minerals will likely complicate European rearmament plans.”
As an example of the risks of this dependence, Airbus and French company Safran met half of their titanium needs before 2022 with Russian imports and had to find new suppliers. Furthermore, due to Chinese restrictions on the export of critical minerals, companies such as France’s Thales and Germany’s Rheinmetall have already warned of the potential high costs of restructuring their supply chains.
Russia grows despite sanctions
Russia’s two largest arms companies, Rostec and United Shipbuilding Corporation, increased their revenues by 23% to $31.2 billion, despite international sanctions that led to shortages of components. Domestic demand was sufficient to largely offset revenue losses due to the drop in arms exports.
“In addition to sanctions, Russian arms companies face a shortage of skilled labor. This could slow down production and limit innovation,” says Diego Lopes da Silva, senior researcher at SIPRI’s Military Expenditure and Arms Production Program. “However, we need to be cautious when making such predictions, as the Russian arms industry proved resilient during the war in Ukraine, contrary to expectations.”
Asia and Oceania in decline
This was the only region in the world to record a general drop in armaments revenue among the 100 largest companies in 2024, falling to US$130 billion, 1.2% less than in 2023, and which was due to a 10% decline in armaments revenue among the eight Chinese companies in the military sector. top 100, the most notable case being the 31% drop in armament revenues for NORINCO, the main Chinese producer of land systems.
“A series of allegations of corruption in China’s arms acquisition has led to the postponement or cancellation of major arms contracts in 2024,” said Nan Tian, director of SIPRI’s Military Expenditure and Armament Production Program, in a statement. “This raises uncertainty regarding the progress of China’s military modernization efforts and when new capabilities will materialize.”
In contrast, weapons revenues continued to grow among Japanese and South Korean companies in the ranking of the 100 largest, driven by strong European and domestic demand. The five Japanese companies increased their combined weapons revenues by 40% to $13.3 billion, while the four South Korean producers increased their revenues by 31% to $14.1 billion.
Record in the Middle East
For the first time, nine of the 100 largest arms companies were based in the Middle East, with revenues of US$31 billion, a growth of 14%. It should also be noted that the three Israeli arms companies present in the ranking increased their combined revenues by 16% to $16.2 billion.
“The growing negative reaction to Israel’s actions in Gaza appears to have had little impact on interest in Israeli weapons”, notes Zubaida Karim, researcher at SIPRI. “Many countries continued to place new orders with Israeli companies in 2024.”