Rise in SIPRI Top 100 arms sales revenue delayed by production challenges and backlogs

4 December 2023

Photo: Wikimedia

(Stockholm, 4 December 2023) Revenues from sales of arms and military services by the 100 largest companies in the industry totalled $597 billion in 2022, 3.5 per cent less than 2021 in real terms, even as demand rose sharply, according to new data released today by the Stockholm International Peace Research Institute (SIPRI), available at www.sipri.org.

Read this press release in Catalan (PDF), French (PDF), Spanish (PDF) or Swedish (PDF).

Click here to explore the interactive table of the SIPRI Top 100 ranking of arms producers and military services providers.

Click here to explore the SIPRI Top 100 interactive map.

Download the SIPRI Fact Sheet here.

The decrease was chiefly the result of falling arms revenues among major companies in the United States. Revenues increased substantially in Asia and Oceania and the Middle East. Outstanding orders and a surge in new contracts suggest that global arms revenues could rise significantly in the next few years.

Demand for weapons grows but production lags behind

Russia’s full-scale invasion of Ukraine and geopolitical tensions around the world fuelled a strong increase in demand for weapons and military equipment in 2022. However, despite receiving new orders, many US and European arms companies could not significantly ramp up production capacity because of labour shortages, soaring costs and supply chain disruptions that were exacerbated by the war in Ukraine. In addition, countries placed new orders late in the year and the time lag between orders and production meant that the surge in demand was not reflected in these companies’ 2022 revenues.

‘Many arms companies faced obstacles in adjusting to production for high-intensity warfare,’ said Dr Lucie Béraud-Sudreau, Director of SIPRI’s Military Expenditure and Arms Production Programme. ‘However, new contracts were signed, notably for ammunition, which could be expected to translate into higher revenue in 2023 and beyond.’

In contrast to the major US and European suppliers, companies in Asia and Oceania and the Middle East saw their arms revenues grow significantly in 2022, demonstrating their ability to respond to increased demand within a shorter time frame. This was especially true in countries where companies maintain responsive ‘ever-warm’ manufacturing capabilities, such as Israel and South Korea, and those where companies tend to rely on short supply chains.

Arms revenues fall in USA due to production challenges

The arms revenues of the 42 US companies in the Top 100 fell by 7.9 per cent to $302 billion in 2022. They accounted for 51 per cent of the total arms revenue of the Top 100. Of the 42 US companies, 32 recorded a fall in year-on-year arms revenue, most commonly citing ongoing supply chain issues and labour shortages stemming from the Covid-19 pandemic.

‘We are beginning to see an influx of new orders linked to the war in Ukraine and some major US companies, including Lockheed Martin and Raytheon Technologies, received new orders as a result,’ said Nan Tian, SIPRI Senior Researcher. ‘However, because of these companies’ existing order backlogs and difficulties in ramping up production capacity, the revenue from these orders will probably only be reflected in company accounts in two to three years’ time.’

Asia outperforms Europe on back of military modernization drives

The arms revenues of the 22 companies from Asia and Oceania listed in the ranking rose by 3.1 per cent to reach $134 billion in 2022. This was the second consecutive year where Top 100 arms revenues for Asia and Oceania were higher than those for Europe.

‘Domestic demand and reliance on local suppliers shielded Asian arms companies from supply chain disruptions in 2022,’ said Xiao Liang, a researcher with the SIPRI Military Expenditure and Arms Production Programme. ‘Companies in China, India, Japan and Taiwan all benefited from sustained government investment in military modernization.’

The combined arms revenues of the four South Korean companies in the Top 100 fell by 0.9 per cent, primarily due to an 8.5 per cent drop recorded by the country’s biggest arms producer, Hanwha Aerospace. Two South Korean companies reported revenue growth, most notably LIG Nex1. South Korean companies are likely to see increased revenues in coming years due to a surge in booked orders after signing major arms deals with Poland and the United Arab Emirates.

Modest revenue growth in Europe as Ukraine-linked demand starts to filter through

The arms revenues of the 26 companies in the Top 100 based in Europe rose by 0.9 per cent to reach $121 billion in 2022.

‘The war in Ukraine created demand for materiel suited to a war of attrition, like ammunition and armoured vehicles. Many European producers of these items saw their revenues grow,’ said Lorenzo Scarazzato, a researcher with the SIPRI Military Expenditure and Arms Production Programme. ‘They included companies based in Germany, Norway and Poland. For instance, Poland’s PGZ increased its arms revenue by 14 per cent, benefiting from the accelerated military modernization programme the country is pursuing.’

Trans-European companies Airbus and KNDS were among the main sources of arms revenue growth in Europe, largely due to deliveries against long-standing orders.

Turkish companies drive significant increase in Middle Eastern arms revenue  

The Middle East saw the largest percentage rise in arms revenue of any region in 2022, as all seven Middle East-based companies in the Top 100 recorded substantial growth. Their combined arms revenues of $17.9 billion marked an 11 per cent year-on-year increase. The four Turkish companies’ total arms revenues reached $5.5 billion—22 per cent more than in 2021. The aggregate arms revenues of the three Israeli companies in the ranking reached $12.4 billion in 2022, a 6.5 per cent increase compared with 2021.

‘Middle Eastern companies that specialize in less technologically sophisticated products were able to scale up production faster in response to surging demand,’ said Dr Diego Lopes da Silva, SIPRI Senior Researcher. ‘A case in point is Türkiye’s Baykar, producer of the Bayraktar TB-2 drone. Baykar entered the Top 100 for the first time after its arms revenue rose by 94 per cent, the fastest growth rate of any company in the ranking.’  

Other notable developments

• In 2022 China accounted for the second largest share of combined Top 100 arms revenues by country, at 18 per cent. The aggregate arms revenues of the eight Chinese arms companies in the ranking increased by 2.7 per cent to $108 billion.
• The arms revenues of the seven companies in the United Kingdom listed in the Top 100 grew by 2.6 per cent to reach $41.8 billion, or 7.0 per cent of the total.
• Due to a lack of data, only two Russian companies were included in the Top 100 for 2022. Their combined arms revenues fell by 12 per cent to $20.8 billion. Transparency among Russian companies continues to decline. Despite being a holding entity with no direct manufacturing capacity, Rostec is included in the 2022 ranking as a proxy for the companies it controls.
• The only Ukrainian company in the Top 100, UkrOboronProm, saw a 10 per cent real-terms drop in its arms revenue to $1.3 billion. Although its arms revenue increased in nominal terms, this was more than offset by the country’s high inflation.

 

About the SIPRI Arms Industry Database

The SIPRI Arms Industry Database was created in 1989. At that time, it excluded data for companies in China, the Soviet Union and countries in Eastern Europe. The current version contains data for 2002–22, including data for companies in Russia. Chinese companies are included from 2015 onwards.

‘Arms revenue’ refers to revenue generated from the sales of military goods and services to military customers domestically and abroad. Unless otherwise specified, all changes are expressed in real terms and all figures are given in constant 2022 US dollars. Comparisons between 2021 and 2022 are based on the list of companies in the ranking for 2022 (i.e. the annual comparison is between the same set of companies). Longer-term comparisons are based on the sets of companies listed in the respective year (i.e. the comparison is between a different set of companies).

The SIPRI Arms Industry Database, which presents a more detailed data set for the years 2002–22, is available on SIPRI’s website at <https://www.sipri.org/databases/armsindustry>.

This is the first of three major data launches in the lead-up to the release of SIPRI’s flagship publication in mid 2024, the annual SIPRI Yearbook. Ahead of this, SIPRI will release its international arms transfers data (details of all international transfers of major arms in 2023) as well as its world military expenditure data (comprehensive information on global, regional and national trends in military spending in 2023).

Related content

SIPRI Arms Industry Database

The SIPRI Top 100 Arms-producing and Military Services Companies, 2022

The SIPRI Top 100 arms-producing and military services companies in the world, 2022

Change in arms revenue of the SIPRI Top 100, by country, 2021–22

Public-Private Partnership Is Key to Building Defense Industrial Base and Workforce

Dec. 3, 2023 | By Joseph Clark , DOD News |


The U.S. defense industrial base and federal government must work together to shore up the defense industrial base and workforce of the future, the Pentagon's top acquisition official said yesterday.  



William A. LaPlante, undersecretary of defense for acquisition and sustainment, called for a whole-of-government approach and creative solutions by the private sector to draw the talent needed to ensure a capable, innovative industrial base with a talented resilient workforce. 

He highlighted the need for our nation and our global allies to produce critical systems and equipment rapidly and at scale. He also said recruiting a trained and skilled workforce to the defense industrial workforce requires public-private collaboration at all levels to build a robust talent pipeline. 

"This is at the state and local levels. This is at the high schools all the way up to the federal level," LaPlante said during a panel discussion at the Reagan National Defense Forum in Simi Valley, California. 

"I think we can do [an] even a better job at … making sure we're all talking to each other," he said.  



LaPlante and his fellow panel members took note of U.S. shipbuilders' investments in training opportunities for high schoolers to develop skills that will translate into well-paying jobs that will be in demand in the future.  

"I think the submarine industrial base has done a lot of really good work," he said. 

He added that the government and private sector can also work together to ensure that the work environment within defense manufacturing is attractive to future talent.  

"If you've been to some of these advanced manufacturing [facilities], it looks like they're at a startup," he said. "It's really cool. That actually matters. And, so, the government—all of us—can help...to invest in those areas." 



LaPlante also said the government and private sector can work together to lower barriers to entry for some professions that require highly skilled employees, but not necessarily a college degree. 

While he said that this may not be feasible for all positions, it can work in some. "You know, people without college degrees can do software sometimes a lot better than those of us that are overly educated beyond our intelligence," LaPlante said with a touch of humor. "You think about that; that goes against culture, right? But we've got to think of these [things] creatively like that," he said.  

The Defense Department is preparing to release a comprehensive National Defense Industrial Strategy—the first of its kind in DOD's history—that seeks to tie our nation's highly capable and innovative industrial and technology base to our current National Defense Strategy and meet the global challenges DOD confronts.

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PERMANENT ARM$ ECONOMY

SIPRI: Saudi Arabia largest importer of arms, US biggest exporter

Over a third of the global weapons sold worldwide during the past five years came from the United States. About half of US arms transfers went to the Middle East



About 50% of weapons sold by the US went to the Middle East


The US accounted for 37% of global arms sales during the 2016-2020 period and sold arms to 96 countries. Almost half of its sales went to the Middle East, the Stockholm International Peace Research Institute (SIPRI) said in a report on Monday. US exports increased 15% compared to the 2011-2015 period.

International deliveries of arms were flat in the period 2016-2020, ending more than a decade of increases, SIPRI said. It was the first time since 2001–2005 that the volume of deliveries of major arms between countries — an indicator of demand — did not increase from the previous five-year period.

The United States, France and Germany — three of the world's biggest exporters — increased deliveries but falls in exports from Russian and China offset the rise, SIPRI said.

Russia is the world's second-largest arms exporter, while France stood third, according to the report. Russia's sales were dented by a drop in imports from India.

Saudi Arabia tops as largest importer

Middle Eastern countries accounted for the biggest increase in arms imports, up 25% in 2016–20 from 2011–15.

Saudi Arabia, the world's biggest arms importer, increased its arms imports by 61% and Qatar by 361%.

The United Arab Emirates recently signed an agreement with the United States to purchase 50 F-35 jets and up to 18 armed drones as part of a $23 billion package.

Asia and Oceania were the largest importing regions for major arms, receiving 42% of global arms transfers in 2016–20. India, Australia, China, South Korea and Pakistan were the biggest importers in the region.

"For many states in Asia and Oceania, a growing perception of China as a threat is the main driver for arms imports," said Siemon Wezeman, a senior researcher at SIPRI.

COVID impact too early to tell

SIPRI said that it was too early to tell whether a recession stemming from the COVID-19 pandemic could slow down arms deliveries.

"The economic impact of the COVID-19 pandemic could see some countries reassessing their arms imports in the coming years. However, at the same time, even at the height of the pandemic in 2020, several countries signed large contracts for major arms," said Wezeman.

am/sri (dpa, Reuters)

Global Arms Trade Plateauing Amid COVID-19 as Sales Gap Between US, Russia Widens – SIPRI

 

Global Arms Trade Plateauing Amid COVID-19 as Sales Gap Between US, Russia Widens – SIPRI

Lance Cpl. Juanenrique Owings

MILITARY & INTELLIGENCE

06:13 GMT 15.03.2021Get short URL

by Igor Kuznetsov

 

Substantial increases in arms sales by three of the top five exporters (the US, France, and Germany) were largely offset by declining Russian and Chinese exports, as the COVID pandemic is yet to take its economic toll on nations and affect their arms procurements.

International trade in major arms has levelled off over the past two five-year periods, with the exception of the Middle East, where there has been a sharp increase, the Stockholm International Peace Research Institute SIPRI has said in a fresh report.

Nevertheless, global arms trade has remained close to the highest level since the end of the Cold War in the early 1990s, when the Soviet Union collapsed. Whether there has been a break in trends on the global arms market, SIPRI's researchers are still hesitant to say.

"It is too early to say whether the rapid growth of arms transfers in the last two decades is over, Pieter Wezeman of SIPRI's research programme for weapons and military spending in the city of Solna, told national broadcaster SVT.

SIPRI, however, did not rule out the coronavirus pandemic possibly affecting the statistics for an entire five-year period.

"The economic effects of the COVID-19 pandemic may, for example, cause some countries to re-evaluate their arms imports in the coming years. At the same time, however, several countries have signed major arms contracts in the midst of a burning pandemic", Wezeman said.

With 96 client states, the US remains the world's largest arms exporter, increasing its global share of arms exports from 32 to 37 percent. Almost half (47 percent) of US arms transfers went to the Middle East. Substantial increases in transfers by three of the top five arms exporters (the US, France, and Germany) were largely offset by declining Russian and Chinese arms exports, SIPRI noted.

One major outlier is the Middle East, which clearly went against the trend and greatly increased its arms procurements by 25 percent during the same period. The spike is mostly due to major acquisitions by Saudi Arabia (up by 61 percent), Egypt (up by 136 percent) and Qatar (up by 361 percent).

"Ongoing wars in Yemen and Libya, rivalries between countries in the Gulf region, threats against Iran, and rising tensions over oil and gas reserves in the Mediterranean are important drivers of demand for weapons in the region", Pieter Wezeman commented.

Based in the Swedish capital, the Stockholm International Peace Research Institute was founded in 1966 to provide data, analysis, and recommendations for armed conflict, military expenditures, and arms trade as well as disarmament and arms control. Their research is based on open sources and is directed at decisionmakers, researchers, the media, and the public.

To avoid statistical glitches, the researchers compare five-year stretches. This model has been in use since 1981, when the superpowers were locked in the Cold War and armed themselves to unprecedented levels.

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SIPRI: From climate to war, world entering a critical era

The world is not ready for an age in which environmental degradation meets increased armed conflict, suggests a new report from the Stockholm International Peace Research Institute.



Researchers found that armed international conflicts had doubled from 2010 to 2020

The Stockholm International Peace Research Institute has painted a vast and worrying picture in its latest report, entitled "Environment of Peace: Security in a New Era of Risk."

The independent research institute, or SIPRI, which has received worldwide recognition for its annual tracking of international arms exports, warns of a global emergency.

"A compound environmental crisis and a darkening security horizon are feeding each other in dangerous ways," SIPRI's researchers write. Felled forests, melting glaciers and polluted oceans are occurring simultaneously with an rise in the number of conflict-related deaths, arms expenditures and increasing numbers of people at risk of starvation. Pandemics pose further dangers.

Somalia provides an example of such simultaneous emergencies. The East African country is dealing with a two-year drought, poverty and attacks from the terror group al-Shabab.

Similar problems have arisen in Central America. Crop failures linked to climate change have combined with conflict and corruption to trigger a mass exodus toward the United States.

Greenland's ice sheets represent 8% of the world's frozen water — and they are melting faster every year

'Time to act is now'

Lacking a global plan, the world is "stumbling" into these intertwined dangers, according to SIPRI.

"Nature and peace are so closely linked that damaging one damages the other. By the same reasoning, enhancing one enhances the other," SIPRI's director, Dan Smith, told DW. "Action is possible — and the time to act is now."

The report's release coincides with the start of the ninth annual Stockholm Forum on Peace and Development and is SIPRI's wake-up call for politicians and decision-makers. According to SIPRI, many governments have failed to recognize the depths of the crises — or have even actively ignored the issues, allowing them to become worse.

Smith said some governments "would like to act, but they have other priorities that demand time and attention as a matter of urgency, such as the pandemic for the last two years and the war in Ukraine today."

Watch video 05:13 Climate and conflict

The 30 authors of the report, drawn from SIPRI and other institutes, conclude that, though humans overall are financially better off than they used to be, they are also more insecure in many other ways. Over 93 pages, the authors describe the consequences of regional catastrophes and conflicts in an interconnected world.

Extreme weather events caused by climate change and the coronavirus pandemic have threatened global supply chains. Conflicts and crop disasters have made farming unreliable, sending farmers into the global migration flows. Often the countries that farmers are fleeing from are also dealing with high poverty levels and poor governance, according to SIPRI.

SIPRI reports that the number of armed conflicts between countries doubled from 2010 to 2020, to 56. The number of refugees and displaced people around the world also doubled, rising to 82.4 million.

In 2020, there was also an increase in the number of nuclear warheads in the world — after years of decreases. In 2021, the world's military spending exceeded $2 trillion (€1.9 trillion) for the first time.

Unsustainable exploitation continues

The SIPRI paper also explores climate change, pointing out a number of sobering facts: About one in four species face extinction; the number of pollinating insects is rapidly declining; soil quality is deteriorating; and natural resources continue to be exploited at unsustainable levels.

Climate change is also leading to more frequent and intense extreme weather events. "The pandemic shows us clearly the risks we run when we choose not to prepare," Margot Wallstrom, Sweden's former foreign minister and a former European commissioner for the environment, said in a statement accompanying the report's release.

"As the environmental and security crises get worse, governments need to assess what risks lie ahead, to develop the capacity to deal with them and to make societies more resilient," said Wallstrom, the chair of the panel of international experts who helped guide the project's researchers.

The researchers write that South Korea provides a good example of how to act with foresight. When the COVID-19 pandemic began, South Korea applied lessons learned during the 2002 SARS outbreak.

Over the two years of the pandemic so far, South Korea has mostly managed to keep its national mortality rate to about 10% of that of countries with similar-sized populations. In doing so, South Korea has also avoided many of the economic and societal problems that other countries have dealt with.

Common threats

The SIPRI researchers also offer possible off-ramps for the global crisis, as well as short-term measures. This new era of risk requires new modes of cooperation to address common threats. And, according to the report, decision-making processes everywhere from the United Nations to municipal projects should always involve the people who will most feel the impact.

But is this kind of advice realistic? Given Russia's invasion of Ukraine, the potential for a new Iron Curtain and tensions between China and the West, is the idea of improved international cooperation not just wishful thinking?

"Assuming something is impossible makes it impossible," said Smith. He suggested that self-interest should convince governments to act. Officials know that "the environmental degradation is generating — and will generate — insecurity," he said. And that "can only be addressed by cooperating," he added.

"Since they need security, they need to reverse environmental deterioration," said Smith. "They can do this only by working together, as China and the US recognized in their joint statement on cooperating on climate action at COP26 last November in Glasgow."

As a major economic power, Germany can play a vital role in shaping the necessary change, said Smith. "Germany was the first country to raise the links between climate change and insecurity at the UN Security Council." Now, he said, Germany has the opportunity to "start with an energy transition that doesn't just wean it off Russian fossil fuels, but off fossil fuels altogether."

This article was originally written in German

WORLD WATER CONFLICTS: THE GLOBAL HOT SPOTS

Water conflicts worldwide

Water conflicts have more than doubled over the last 10 years compared to previous decades, research shows. Sometimes the essential resource is at the root of these clashes but more often than not, disputes over water alone will not spark violence. Instead, water can act as an accelerant when mixed together with other problems, such as poverty, inequality and hunger.

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Governments help arms firms avoid Covid slump: report





Marc PRÉEL
Sun, December 5, 2021,

The world's biggest weapons manufacturers largely avoided the economic downturn caused by Covid-19 and recorded a growth in profits last year for the sixth year in a row, according to a report published on Monday.

Governments around the world have continued to buy arms during the pandemic and some also passed measures to help their big weapons firms, according to the Stockholm International Peace Research Institute (SIPRI).

Overall, the 100 top weapons firms saw their profits rise by 1.3 percent on 2019 to a record $531 billion, despite the global economy contracting by more than three percent.


"Military manufacturers were largely shielded by sustained government demand for military goods and services," said SIPRI researcher Alexandra Marksteiner in the institute's annual assessment of arms companies.

"In much of the world, military spending grew and some governments even accelerated payments to the arms industry in order to mitigate the impact of the Covid-19 crisis."

The top five arms firms were all from the United States, Lockheed-Martin -- which counts F-35 fighter jets and various types of missiles among its bestsellers -- consolidating its first place with sales of $58.2 billion.

Britain's BAE Systems, in sixth position, was the highest-placed European firm, just ahead of three Chinese groups.

- Rise of China -

"The rise of China as a major arms producer has been driven by its aim to become more self-reliant in weapons production and by the implementation of ambitious modernisation programmes," the report said.

While China's arms sales have expanded, they still lag US and British firms, accounting for a total of 13 percent of the top 100 arms sales in 2020.

Sales by the five Chinese firms in the top 100 totalled an estimated $66.8 billion in 2020, up 1.5 percent on the previous year.

"In recent years, Chinese arms companies have benefited from the country's military modernisation programmes and focus on military–civil fusion," SIPRI senior researcher Nan Tian said.

"They have become some of the most advanced military technology producers in the world."

Of the top-producing countries, only France and Russia saw their firms' sales decline last year.

The institute said the firms had benefited from the broad injection of cash into economies, as well as specific measures designed to help arms companies such as accelerated payments or order schedules.

And as military contracts usually span several years, firms were able to make gains before the health crisis took hold.

"However, despite these and other factors, global arms production was not fully immune to the impact of the pandemic," the report said, pointing to France's Thales which blamed a 5.8 percent fall in arms sales on lockdown disruptions.

The report highlighted that the rate of increase in profits had slowed substantially between 2019 and 2020, and noted that measures taken to halt the spread of the virus had disrupted supply chains in the weapons industry just as they had across the wider economy.

SIPRI: Global arms industry flourishing despite COVID

A $531-billion business: The new SIPRI report shows that the world's top 100 arms producers have continued to increase sales — even in the pandemic year of 2020 and despite the global economy contracting.

Arms sales by German companies went up 1.3% in 2020, says SIPRI

Lockdowns, crumbling supply chains, jittery consumers: The COVID-19 pandemic has brought about massive economic slumps around the world. One sector, however, has proved immune to the virus: the arms industry. This is confirmed by the latest report on the world's 100 largest arms manufacturers by the Stockholm International Peace Research Institute (SIPRI).

SIPRI researcher Alexandra Marksteiner told DW that she was especially surprised by the data from 2020, the first year of the pandemic: "Even though the IMF put global economic contraction at 3.1%, we saw that the arms sales of these top 100 companies increased nonetheless — we saw an overall increase of 1.3%."

The sales of the top 100 arms manufacturers totalled $531 billion (€469 billion) in 2020, more than the economic output of Belgium. Some 54% of this was accounted for by the 41 US companies in SIPRI's top 100. The main companies in the industry are US-based: Lockheed Martin alone sold more than $58 billion worth of weapons systems last year —  a sum bigger than the GDP of Lithuania.

Effective lobbying

Companies that big also wield political power. Markus Bayer, a political scientist at the Bonn International Centre for Conflict Studies (BICC), says arms companies are deliberately exerting influence. He quotes a report by the US NGO Open Secrets: "Defense companies spend millions every year lobbying politicians and donating to their campaigns. In the past two decades, their extensive network of lobbyists and donors have directed $285 million in campaign contributions and $2.5 billion in lobbying spending to influence defense policy."

And for the arms manufacturing giants, the spending appears to pay off. Alexandra Marksteiner explains that the US Department of Defense provided targeted support for the arms industry during the pandemic. "For example, they made sure that employees of defense companies were largely exempted from stay-at-home orders. On the other hand, there were some orders that were set up so that funds could be transferred to the companies a bit earlier, ahead of schedule, so that they would have a bit of a buffer."

Big Asian players

Simone Wisotzki has also examined SIPRI's new figures. An arms control expert at the Peace Research Institute Frankfurt (PRIF), she was especially struck by "the fact that arms companies from the Global South are becoming increasingly important." Wisotzki mentions India in particular: It has three companies in the top 100, whose combined sales total 1.2% — on a par with South Korea.

However, there are far more weapons leaving the factories of India's northern neighbor, China. SIPRI has been including Chinese companies in its studies since 2015, despite the many problems with transparency. China's five companies on the list are benefiting from the Chinese military's modernization program, and their shipments now account for 13% of the top 100's sales.

Wisotzki says India has not signed up to the international

 arms agreement

Looking at the Chinese entries, Marksteiner notes that "these companies are capitalizing on what is called military-civilian fusion," citing the largest Chinese arms conglomerate as an example: "There was a satellite system that NORINCO co-developed, and it makes quite a bit of revenue from that, and it's used both for military and civilian purposes."

China has been modernizing its military

Militarized information technology

Simone Wisotzki also notes that the boundary between civil and military technologies is becoming increasingly blurred. "Information technology can no longer be separated from weapons technology," she says. In its new report, SIPRI specifically looks at the growing role tech companies play in the arms business.

Marksteiner emphasizes that, if you want a clear picture of the arms industry, "you can't just talk about traditional players like Lockheed Martin." SIPRI says that, in recent years, some Silicon Valley giants like Google, Microsoft and Oracle have sought to deepen their involvement in the arms business and have been rewarded with lucrative contracts.

SIPRI gives the example of a deal between Microsoft and the US Department of Defense worth $22 billion. The company has been contracted to supply the US Army with a type of super-glasses, called the Integrated Visual Augmentation System, which will provide soldiers with real-time strategic information about the battlefield.

The US military's interest in Silicon Valley is easy to explain. "They realize that, in these new enabling technologies, be it artificial intelligence or machine learning or cloud computing, these Silicon Valley companies' expertise is far beyond what you would see from traditional arms industry players," says Marksteiner. "There is a chance that some of these companies will actually end up entering the [SIPRI] top 100."

The line between technology for civilian use and miltary use is becoming increasingly blurred

Russia is falling behind

Along with France, the biggest drop in arms sales was recorded by Russia. The nine Russian companies on the list sold 6.5% fewer weapons last year than in 2019. The BICC's Markus Bayer believes this drop, to just 5% of the top 100's total sales, is directly related to India and China having developed arms factories of their own. Both countries were previously big buyers of Russian armaments.

Bayer cites the example of aircraft carriers. The first Chinese carrier was based on a Soviet-built ship purchased by Beijing in 1998. The Chinese carrier, named Liaoning, came into service in 2012.

A lot has happened since then, says Bayer. "In the last 20 years, China has not just caught up with Russia in terms of aircraft carrier production capabilities, it's overtaken it. Russia hasn't put a single aircraft carrier into service in that time. And now India has developed its own carrier as well, based on what was originally Soviet technology."

The Soviet aircraft carrier Warjag turned into the Chinese vessel Liaoning

Where does Europe stand?

The European arms industry has a combined 21% of the top 100's sales on its books. In 2020, the 26 European companies listed sold $109 billion worth of weapons. The four wholly German arms companies accounted for just under $9 billion of this total.

There are also trans-European companies like Airbus, which handled arms deals worth almost €12 billion — 5% more than in 2019. Europe is increasingly relying on joint ventures like these. Markus Bayer explains: "Europe is now trying, by political means, to expedite such cooperative ventures for the development of a 'Next Generation Weapon System,' the 'Future Combat Air System,' or the 'Main Ground Combat System,' so it can bear the high development costs for new systems like these."

These joint productions certainly make sense from a cost point of view. But as far as arms export control is concerned, they can often be problematic, says Simone Wisotzki. Referring to the Eurofighter Typhoon, a fighter jet developed by Germany, Britain, Italy and Spain, the PRIF analyst comments that "it is also specifically supplied to problematic third countries, such as Saudi Arabia, which is still waging war in Yemen." National export regulations are often not applied to joint productions — and it seems that Europe is still a long way from implementing effective joint controls on arms exports.

This article was translated from German

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