The service is betting that venture-style risk-taking can shave years off procurement timelines and will determine whether Silicon Valley speed can mesh with Pentagon scale.

“With Fuze, the Army is telling innovators that we’re open for business. Fuze will help us to not only invest but scale promising capabilities — bridging the valley of death,” Army Secretary Dan Driscoll said in a statement to Defense News.

Unlike traditional procurement that starts with an Army-defined problem followed by appointing a company to solve the problem, Fuze flips the approach. The new process allows the service to find technology to bring in “that helps us think about what our problems are differently,” Chris Manning, the Army’s deputy assistant secretary for research and technology, told Defense News in a recent interview.

Venture capitalists make 100 investments and only end up with a few with outsized returns. The Army is accepting that same risk to capture bigger payoffs.

“We’re really taking the approach where we’re going to deliberately make a large number of investments in emerging tech companies,” Matt Willis, the Army’s Fuze program director, said in the interview. “Some tech might not reach the maturity that we want, [but] there’s going to be some companies that are going to have an outsized, revolutionary impact on our soldiers.”

The program aligns four existing fundings streams: XTech prize competitions, small-business funding, tech maturation and manufacturing technology — worth about $750 million in fiscal 2025.

The Army plans to initiate the program by running an XTech Disrupt live pitch competition, in partnership with Y Combinator — a technology startup accelerator and VC firm — at the Association of the U.S. Army’s annual conference next month in Washington.

The competition, according to Willis, will focus on four technology areas important to the Army: electronic warfare, unmanned aircraft systems, counter-UAS and energy resiliency at the edge. The prize pool totals $500,000.

Technologies that win out in the competition will go straight into the hands of soldiers in operational environments for real-world evaluation.

The Army has spent the better part of a decade trying to match its acquisition speed with the rest of the high-tech world, but trying to break down the bureaucracy and change the culture has been a challenging task.

Fuze is central to a broader shift in the Army as it seeks dramatic transformation rapidly.

“Continuous transformation is like our once-in-a-generation change for the Army to get at and prepare for the future battlefield,” Brandon Pugh, the Army’s cyber adviser, told Defense News. “But a key part of that is the acquisition process to really make sure that the warfighter and the soldier on the battlefield has the correct technology they need.”

Speed is central to that transformation. “We’re hoping to have a capability to an acquisition pathway in 10 days, and hopefully within 30 to 45 days, for the first prototype to be with an Army unit,” Pugh said. “That is extraordinary.”

The Army has struggled with the pace of past acquisitions, particularly in fast-evolving fields like electronic warfare. “It’s so quickly evolving, you have to be able to acquire this quickly and iterate quickly, or else you’re instantly behind, even if you do successfully acquire it. I think that’s the risk,” Pugh noted.

Army officials stressed that Fuze is not just a bureaucratic reshuffling. “This isn’t just like a rebranding. We’re coalescing these innovation programs from a strategic, operational and execution standpoint… to help companies move through that pipeline more quickly,” Willis said.

“The end outcome we want is having the best technology here quickly,” Pugh said.

The contract marks the largest deal in the history of the company’s Missiles and Fire Control unit.

The agreement covers the fiscal years 2024 through 2026 and calls for the procurement of 1,970 Patriot Advanced Capability-3 Missile Segment Enhancement interceptors and associated hardware for the U.S. and allies, according to the service’s statement.

“PAC-3 MSE’s recent combat performance solidified it as a must-have capability for America and its allies around the world,” Jason Reynolds, Lockheed’s vice president for Integrated Air and Missile Defense, said in a company statement. “With this contract, we’ll be delivering record numbers of PAC-3 MSE for years to come.”

The contract underscores Washington’s push to replenish missile stockpiles and strengthen supply chains as conflicts in Ukraine and the Middle East heighten the demand. The PAC-3 MSE, which uses hit-to-kill technology, is designed to counter tactical ballistic missiles, cruise missiles, hypersonic threats and aircraft.

Seventeen partner nations, including the U.S., field PAC-3 missiles.

“The muti-year buy enables “the Army to procure a larger quantity of missiles for more rapid delivery, thus filling our inventory faster,” Maj. Gen. Frank Lozano, who leads the Army’s Program Executive Office Missiles and Space, said in the service’s statement.

Lockheed said it plans to deliver more than 600 interceptors in 2025, ramping up production nearly two years ahead of the award thanks to internal investments.

The contract “reflects disciplined acquisition and responsible stewardship of taxpayer resources,” Joseph Giunta, the Army’s senior contracting official at Redstone Arsenal, Alabama, said in the statement.

Lockheed Martin told Defense News earlier this summer it was working toward delivering 650 PAC-3 MSE missiles per year by 2027. It is currently producing roughly 550 each year.

The company is also looking at how it might possibly ramp up to 650 missiles a year earlier than planned, Reynolds told Defense News in July at the Association of the U.S. Army’s LandEuro conference in Wiesbaden, Germany.

“What we’re endeavoring to do in partnership with the U.S. government, is to pull that left as much as we can,” he said.

The company is also looking at “the efficiencies and streamlining and doing everything we can to stretch those dollars actually to take that to a higher capacity, upwards of around 750 per year by 2027,” Reynolds said.

The government has not yet officially released the number for a top production level, but “if you take that trajectory and you project it forward into the future years, you will see as well north of 1,000 and then even much higher after that,” he said.

As dramatic electronic music pulsed, the video showcased one of the Air Force’s newest drones — and heralded an emerging sea change in the defense industry.

The video, posted May 1 by Air Force chief of staff, served to announce served to announce that the YFQ-44 collaborative combat aircraft, an autonomous drone intended to one day fly alongside the service’s most advanced piloted fighters, had officially begun ground testing. Soon after, a photograph of another CCA in ground testing — the YFQ-42 — was also released.

But it wasn’t the defense industry’s biggest aviation companies, such as Lockheed Martin, Boeing or Northrop Grumman, behind the service’s first fighter drones.

It was Anduril Industries and General Atomics, two smaller but growing firms, behind the drones dubbed YFQ-44 and YFQ-42, respectively.

Click here to view the 2025 Defense News Top 100

The growing importance of those companies, and other smaller and technology-focused firms, continues to reshuffle the often staid list of the world’s top 100 defense firms, as analyzed by Defense News.

Advancements in artificial intelligence and drone warfare continue to bear fruit, prompting many nations’ militaries to rethink their defense strategies and turn to unexpected companies to bolster their armories.

What’s more, massive geopolitical shifts of recent years continued to realign the Top 100 list for 2025.

Russia remained resurgent and emboldened in 2024 as its unprovoked invasion of Ukraine ground on into its fourth year. European allies, worried both about Russia’s military ambitions and a U.S. shift to a more isolationist stance, have renewed focus on rearming themselves. And Israel’s war in Gaza continues to drive defense spending, nearly two years after the Oct. 7 attacks.

“Countries have looked at both their own border security as well as defense writ large against the significant attacks” of recent years, defense contracting expert Alan Chvotkin said. “But we’d also expect to see some increase in their smaller technology-focused companies, because they’ve seen the use of drones or other robotics, other technologies. You’re not going to get those from the traditional heavy industry, aircraft, ship manufacturing … companies that are on the top list today.”

The five biggest companies remained largely unchanged from the previous year, with Lockheed Martin, RTX, Northrop Grumman and General Dynamics topping the list. Also placing third this year: the China Aerospace Science and Industry Corporation.

(Revenues for that corporation from 2023 were not available when last year’s Top 100 list was compiled. The second-highest grossing defense firm in 2023, the Aviation Industry Corporation of China, did not make its 2024 defense revenues available.)

Defense revenues grew dramatically in 2024 — topping $661 billion, 11% higher than the $594 billion those companies notched the previous year.

This paralleled an overall rise in defense spending worldwide, as governments spent more than $2.7 trillion on militaries in 2024, according to the Stockholm International Peace Research Institute, or SIPRI. That was a 9.4% increase over 2023 spending, SIPRI said, and “the steepest year-on-year rise since at least the end of the Cold War.”

In Defense News’ latest Top 100 list, based on defense revenues in 2024, smaller tech firms continue to see profits grow, and in some cases crack into the Top 100:

• Palantir Technologies also emerged on the list at 70, with its defense revenue growth rising to nearly $1.6 billion. Palantir’s work this year with the Trump administration to compile data on Americans has stirred controversy, but the developments happened after 2024, meaning its revenues could grow more next year.
• Kratos Defense and Security Solutions, maker of the Valkyrie drone, saw its defense revenues jump 38% to $989 million. Despite that growth, Kratos’ ranking slipped slightly from 89 to 91, demonstrating the toughness of the competition.
• Anduril landed on the list for the first time at 93, after its defense revenues more than doubled to an estimated $950 million.

“And they’re going to grow rapidly,” Chvotkin said of such companies like Palantir and Anduril. “Besides their strong relationships [with the Trump administration], they’ve intentionally built out their defense structure. … They’re going to continue to be a major player in the IT and cyberspace.”

Chvotkin pointed to a $100 million award by the U.S. Army to Anduril for leading a team of high-tech firms to build a next-generation command-and-control prototype as an example of the deals the firm is landing.

Matt Steckman, Anduril’s president and chief business officer, said in a recent interview that Anduril has been roughly doubling its revenue each year for the last five years.

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Part of Anduril’s growth in 2024 came from its CCA victory, he said, one of its biggest deals of the year, as well as air defense programs for U.S. Special Operations Command, the Marine Corps and the Army, software programs, loitering munitions deals with Taiwan, and autonomous submarines.

“In 2024, you saw a couple of large [autonomous submarine] programs come through, funding growth in our maritime division,” Steckman said. “There’s a renewed focus in unmanned, undersea warfare.”

Steckman anticipates Anduril’s growth to continue due to the company’s diversified portfolio and militaries’ focus on tech.

“The physics of the battlefield have changed permanently,” Steckman said. “The math problem of the battlefield — distances, numbers, mass, size, sensing ubiquity — you have to amass tons of effects at moments of time, at long distances, in order to project power.”

To accomplish that, Steckman continued, “you need an insane amount of computing capacity, driven by breakthroughs in artificial intelligence … autonomy … [and] unmanned command and control. The only way to meet that new math problem is through … software applied to an absolute metric ton of hardware.”

Chvotkin doesn’t expect Anduril to be a unique example for smaller firms.

When asked about growth of firms that specialize in uncrewed systems, Chvotkin pointed to the war in Ukraine.

Both Ukraine and Russia have heavily leveraged drones in the yearslong conflict — everything from Ukraine’s swarm of small quad-copters, which used AI to reach and demolish multiple Russian bombers as part of Operation Spider web, to the Iranian-designed Shahed kamikaze drones that Russia sends to pound Ukrainian cities.

Future conflicts could follow similar paths, Chvotkin said, leading to even greater shifts in the defense industry.

“The increased use of drones, of AI, of small, more tactical approaches rather than heavy industrial systems” will be a hallmark of future wars, he said. “Everything from pilotless aircraft to unmanned subs, all of those things … [will require] a different kind of demand set.”

“There’s still a heavy demand for the traditional munition stuff,” Chvotkin continued. “But in the move to the tech space, [there is] a different kind of demand set starting over the last few years and rapidly accelerating under the Trump administration.”

This emphasis is bipartisan as well. The Biden administration similarly focused on tech and drones, with then-Deputy Secretary of Defense Kathleen Hicks and former Air Force Sec. Frank Kendall initiating the Replicator and CCA programs, respectively.

Even if the White House changes hands after the 2028 election, the Pentagon will likely not shift course — and defense firms with a strong hand in advanced technology will have an advantage.

The Pentagon’s increasing use of Other Transaction Authority, or OTA, agreements — which give the Defense Department more flexibility to enter into arrangements with nontraditional defense contractors — has allowed it to speed up the development of new technologies and open the defense market to new organizations, Chvotkin said.

Steckman credited former Defense Secretary Ash Carter, who began his tenure in the Pentagon under President Barack Obama as undersecretary of defense for acquisition, technology and logistics, with starting the long process of pushing DOD to transform into a tech-focused enterprise.

“[DOD] is the largest single institution in the world,” Steckman said. “So, it doesn’t actually seem crazy that it’s taking [nearly] 20 years for that bow wave to crest, and then result in the [environment] that you’re seeing today.”

Other nations’ militaries, particularly those of NATO allies, also present a growth opportunity, Steckman said.

“What NATO countries are doing right now is fairly unprecedented, in terms of their own defense industrial bases scaling to meet the current challenge,” Steckman said. “It’s an opportunity for us. To scale at the speeds that they are attempting to achieve, they’re going to need to partner … within their own countries, within Europe [and] with outside partners [like] the U.S.

“They’re all aligned in the types of scale and materiel needs required to reestablish the deterrent effect of Europe, particularly towards Russia,” Steckman added.

Such growth is apparent on the Top 100 list, with Thales rising from 17th last year to 10th in 2024, Italian firm Leonardo rising from 14th to 13th, and German firm Rheinmetall AG going up from 20th to 18th. Rheinmetall’s defense revenues climbed 50% in 2024 to more than $8.2 billion.

That change comes as Germany adopts a more muscular foreign policy — dubbed Zeitenwende, or turning point, 2.0 — to take the lead in rearming Europe in the face of Russian aggression.

Rheinmetall, the largest arms manufacturer in Germany, struck an optimistic tone on geopolitical currents as it announced its 2024 year-end results.

“Rheinmetall is facing the challenges of Zeitenwende 2.0,” chief executive Armin Papperger said in a March 2025 release on 2024 results. “An era of rearmament has begun in Europe that will demand a lot from all of us. However, it also brings us at Rheinmetall growth prospects for the coming years we have never experienced before.”

In the last year and a half, Rheinmetall has expanded its satellite business, focused on expanding manufacturing and engineering capabilities through acquisitions, moved to build an artillery shell factory in Lithuania and partnered with the German military.

Israeli defense companies, meanwhile, saw significant growth in 2024 as well, as the nation’s war in Gaza and conflict with Hezbollah in Lebanon drove higher military spending.

SIPRI reported that Israel’s military spending grew $46.5 billion in 2024, which marked 65% growth over 2023, and the nation’s steepest defense spending increase since the Six-Day War in 1967.

Elbit Systems, an Israeli firm that makes guided munitions and ammunition, aircraft systems, combat vehicles, artillery and other weapon systems, jumped from the 22nd largest defense firm in 2023 to 21st in 2024, with revenues growing 14% to $6.8 billion.

Israel Aerospace Industries remained at No. 28 on the list, posting a defense revenue growth of 20% to $5.2 billion.

And Rafael Advanced Defense Systems climbed two spots to 31. Both firms are key manufacturers of Israel’s Iron Dome air defense, which has been hailed for its success in shooting down rockets and short-range missiles.

In the U.K., BAE Systems leapfrogged Boeing in the rankings to take 6th place.

BAE’s defense revenues grew 17% to more than $32 billion on the strength of its work on programs like Lockheed Martin’s F-35 and Eurofighter’s Typhoon, the U.K. Royal Navy’s Dreadnought class submarine and the Royal Australian Navy’s Hunter class frigate.

Boeing, meanwhile, continued its slide of recent years and dropped to 7th, as its revenues dipped slightly to $31.8 billion.

As recently as 2020, Boeing was the second-largest defense firm in the world, second only to Lockheed Martin. It then began dropping down the list as Raytheon, which later became RTX, Northrop Grumman, General Dynamics and Chinese aerospace corporations surpassed it.

But despite Boeing’s well-publicized troubles in recent years, Chvotkin thinks it’s ripe for a comeback.

If Boeing can get programs like the new Air Force One back on track, he said, the company may be able to come off of its back foot.

Boeing’s contract to build the Air Force’s sixth-gen F-47 fighter also provided a much-needed win, he noted, one that could help regain footing if it can avoid missteps.

“Unless there’s a big issue, they may drop another spot or two, but you’re not going to see their defense revenue drop significantly,” Chvotkin said. “They’re still going to be a significant player. Don’t count them out.”

Many institutional and professional investors remained on the sideline either due to their aversion to the sector’s activities or viewing it as a niche market. That has begun to change.

Even though the sector still remains small compared to technology, semiconductors, and other industries, the past year has seen a significant influx in money invested into the sector and the publicly traded funds being offered to investors. The number of exchange traded funds (ETFs) investing in the sector has grown from four in 2022 to 27, with the assets being managed through these vehicles up nine-fold, to more than $35 billion.

>>> Click here to view the 2025 Defense News Top 100

A dynamic shift in the investor perception of the defense industry is underway. Increased attention to government spending on defense has sent the world’s publicly traded defense stocks higher, providing significant gains over the past several years.

According to the Stockholm International Peace Research Institute think tank, total government spending on defense in 2024 reached a record $2.718 trillion, up 9.4%, the steepest rise since the end of the Cold War. Fueled by the rapid growth in spending by nations in Europe (including Russia) and the Middle East, defense spending has increased for 10 consecutive years.

Of note—Russia increased its defense spending by 38% to approximately $149 billion, representing 7.1% of its GDP and 19% of its total government spending. Ukraine, at $64.7 billion, spends just 43% of what Russia does, yet this amounts to 34% of its GDP, the largest burden in the world.

While historical growth provides a basis for comparison, investments are managed looking toward the future. It was only a few months ago, in early 2025, that it appeared that the conflicts between Russia and Ukraine as well as between Israel and various terrorist factions in the region could be resolved before the year was over. Looking back, that was optimistic.

Russian aggression toward Ukraine has seen a clear escalation while ceasefire discussions have gone nowhere. Israel, following a prisoner swap earlier in the year, has begun a new phase in trying to root out any remaining terrorist elements and a permanent peaceful solution seems fleeting. The Houthis continue to target commercial shipping vessels and Western-aligned targets despite U.S. military responses. North Korea and Iran remain a concern. And lastly, India and Pakistan engaged in military actions into the others’ territories — although for now it appears the U.S. and Europe do not have strong interests in this conflict.

Without a doubt, the 2020s have been marked by profound geopolitical tensions not seen since the end of the Cold War.

Investors have been taking notice of the dramatic European response to the conflict on their Eastern front. The “peace dividend” Europe experienced following the fall of the Soviet Union in the early 1990s has been replaced with a concerted effort to deter a future attack by Russia and reduce its dependency on the United States. The European Commission has proposed to finance a number defense initiatives including: €800 billion ($932 billion) over four years (“SAFE” – Security Action for Europe); relaxed EU deficit rules (“Rearm Europe”); and a 150-billion-euro fund to boost EU production.

Additionally, countries sharing a border with Russia have also found it necessary to significantly increase their defense budgets. The German parliament has called for a €1 trillion investment and, in 2024, increased its defense budget by 28% to $88.5 billion. Likewise, Poland has increased theirs by 31% to $38 billion.

This response by European nations comes as the United States apparently withdraws from the active leadership role on global security that it has maintained since the conclusion of World War II, nearly 70 years ago. Instead of working together to confront the aggressive actions of Russia (who is building a force to take on NATO after it concludes operations in Ukraine), the U.S. and the European Union have been decoupling. As the U.S. goes evermore silent, German troops are engaged in its first foreign deployment since WWII, Lithuania is planting mines to slow a possible Russian incursion, and Finland is increasing security at its border.

To invest in this dynamic shift in European priorities and increased defense spending trajectory, more than a dozen European-focused ETFs have been launched on stock exchanges around the continent and in the U.S. over the past 18 months. These have attracted nearly $15 billion in assets to date and the share prices of many defense stocks headquartered in Europe have doubled over that time — Rheinmetall is up nearly 1,000% since the Russian invasion of Ukraine and more than 2,700% over the past five years.

As “Buy European” expands, the large U.S. defense contractors have begun to establish new partnerships to ensure they remain part of the European aerospace and defense ecosystem. Nevertheless, with a defense budget near $1 trillion and $150 billion in new funds for the recently announced Golden Dome system (much of which will pass through to U.S. firms); the United States is unlikely to cede its position as the world’s largest supplier of military equipment and services.

Still, the impact of U.S. tariffs could add to the global supply chain challenges already faced by a defense sector seeking to meet an uptick in demand.

Defense News’ Top 100 list contains 70 publicly traded companies — or at least their parent organizations — that represent about 77% of the list’s total FY24 global defense revenues of $661.1 billion (up 9.5% from last year). If one excludes Chinese companies from the list, public companies represent 90% of revenues.

From an economic standpoint, the defense sector is not large and has plenty of room to grow. Globally, military activities represent around 2.5% of global GDP. As nations respond to global threats in order to protect their borders and citizens, the resources devoted to the sector continues to rise. Additionally, new technologies constantly evolve the nature of warfare as military planners seek an edge. The implementation of artificial intelligence to improve military systems and adapting to the use of cheap drones and unmanned vehicles as demonstrated in the “field laboratory of the Ukraine,” are two of the latest growth opportunities.

Since the start of the Russia-Ukraine conflict through mid-summer 2025, the benchmark SPADE Defense Index has risen by 90% (vs. 40% for the U.S. stock market). Over the past 28 years, it has produced a positive gain in 23 of them, outperforming the S&P 500 roughly 71% of the time. For investors, a portfolio of defense sector stocks has shown to be a solid investment in both good times as well as troubled ones.

Scott Sacknoff manages the SPADE Defense Index, a modified capitalization-weighted index made up of companies operating in the defense, homeland security and government space sectors.

This was followed by the attack by Hamas on an Israeli music and arts festival in October 2023 and the subsequent response by Israel in the Gaza Strip — and so far only minor skirmishes in the region between other players.

And with the Chinese government increasing its military budget by an estimated 6% to $296 billion in 2023, spending by Japan and Taiwan each grew 11%.

The result of these actions has hardened the resolve of nations and brought security front and center to political discussions. In 2023, government spending on defense increased to a record $2.443 trillion for the procurement of military equipment and supplies to combat threats; to support allies; and to bolster border security.

According to the Stockholm International Peace Research Institute think tank, this is the ninth consecutive year of increases, with last year’s gain of 6.8% the highest level ever recorded.

These resources have funneled through to the global corporations that build, maintain, support and sell the weaponry and supplies. In the U.S. alone, defense spending grew from $721.5 billion in fiscal 2020 (before President Joe Biden took office) to a proposed fiscal 2025 national defense budget of about $926.8 billion; a 28.5% increase.

Defense News’ Top 100 list contains 68 publicly traded companies — or at least their parent organizations — that represent about 73% of the list’s total FY23 defense revenues of $603.9 billion. Exclude China’s presence on the list, and the percentage increases to 89%.

As one would anticipate, the world’s publicly traded defense stocks have seen their price per share rise higher, producing steady gains over the prior two years. Right or wrong, stock prices are a proxy for the health of the defense sector and of investor confidence.

Since the start of the Russia-Ukraine war, defense stocks have risen by 48%, as defined by the SPADE Defense Index. Assets invested in the sector’s exchange-traded funds are up 268% and now total more than $11 billion, including Invesco’s exchange-traded fund, which has quadrupled its assets during this time.

At the firms themselves, recent quarterly reports from many defense companies, both large and small, show backlogs at historic highs.

Results for the first quarter of 2024 by RTX ($202 billion), Lockheed Martin ($159 billion) and others saw these firms post truly astonishing numbers.

Even Boeing, despite its recent issues with its commercial aircraft and cost overruns on some military programs, maintains a backlog of $529 billion — more than six times its total revenue in FY23.

Ramping up the production volume of an older system is more profitable than the margins for developing new technologies and systems, so defense firms should see a direct translation from reducing their backlogs to increased bottom-line profits.

“The math is simple,” according to Mike Stone, a reporter at Reuters. “For example, to meet demand for missile defenses, production of Patriot interceptors for the U.S. Army — a projectile fired at an incoming missile with the aim of knocking it down — will rise from 550 to 650 rockets per year. At around $4 million each, that’s a potential $400 million annual sales boost on one weapons system alone.”

While sporadic supply chain disruptions and issues related to hiring additional staff remain, firms are working to increase production capacity for the weapons systems and equipment required to supply Ukraine’s war effort, support Israel and restock national assets.

Through June 30, 2024, the SPADE Defense Index had gained 11.5% on the year, keeping it near historic highs. Such performance is not atypical. Over the past 27 years, the sector produced positive gains in 22 of them and outperformed the U.S. stock market in 18.

From an investment perspective, while a conclusion or resolution to hostilities in the various ongoing military theaters would likely lead to some investor pullback as a short-term reaction, defense firms should likely see strong support in the coming years as backlogs are reduced, and as potential hot spots in Asia, Oceania, Europe and the Middle East remain active.

For example, Hezbollah — the Iran-backed militant and political organization operating out of Lebanon and considered a terrorist group by the United States and the United Kingdom — is one of the most heavily armed nonstate groups in the world, with an estimated capability that is 10 times that of the militant group Hamas, based in the Gaza Strip.

An all-out war between Hezbollah and Israel would be devastating to both sides and to Lebanon as a whole.

And while current actions are carefully calculated to avoid a major escalation, with near daily exchanges of fire along the border, it only takes a single stray rocket causing mass casualties to see things get out of control, fueling yet another leg of market gains.

Yet, despite this growth and the importance of firms operating in the defense sector to maintain national security and stability, it should be noted that the valuation of firms operating in this space remains notably small.

Case in point: The combined FY23 revenues of Apple, Alphabet and Microsoft are 49.5% greater than the cumulative defense revenues of those found on the Top 100 list.

Likewise, 16 firms individually have a market valuation greater than the five highest-ranking U.S. defense prime contractors — RTX, Lockheed Martin, General Dynamics, Boeing and Northrop Grumman — combined. (Those 16 firms, as of press time, are Apple, Nvidia, Microsoft, Alphabet, Aramco, Amazon, Berkshire Hathaway, Taiwan Semiconductor Manufacturing Co., Meta, Novo Nordisk, Broadcom, Tesla, Eli Lilly, Visa, Walmart and JPMorgan Chase.)

From an economic standpoint, the defense sector is not large and has plenty of room to grow.

Still, for investors, a portfolio of defense sector stocks has shown to be a solid investment in both good times as well as troubled ones. In the coming quarters and years, as firms work through their contract backlogs and shift to new and ongoing threats, the sector remains poised for continued growth.

Scott Sacknoff manages the SPADE Defense Index, a modified capitalization-weighted index made up of companies operating in the defense, homeland security and government space sectors.

• ASELSAN (42, up from 47 last year): producer of defense electronics, especially communications and sensors. ASELSAN was the first Turkish company to crack the Top 100 in 2008 and has consistently been the leading Turkish defense revenue generator.
• Turkish Aerospace Industries (TAI or TUSAS) (50, up from 58): leader in Turkish defense aerospace joined the Top 100 in 2012 and has been the second-ranked Turkish firm since.
• ROKETSAN (71, up from 80): producer of unguided rockets and guided missiles has seen revenues grow in large part due to integration of its products on Turkish unmanned systems
• Machine and Chemical Industry (MKE) (84, new): producer of small arms, artillery and ammunition; shifted from a state-owned enterprise to a joint stock company in 2022. Has helped meet booming demand for artillery and related munitions.
• Military Factory and Shipyard Enterprise (AFSAT) (94, new): aircraft, naval and land systems production and overhaul. Major deals with Pakistan (MILGEM) Burkina Faso/Togo (minesweepers).

Several intriguing aspects of this grouping stand out. First, Turkey occupies an elite tier among international arms producers. Only eight countries have more than two companies in the Top 100, and only three — the U.S., U.K. and China — have more Top 100 firms than Turkey.

The U.S. is in a class of its own, but with 25% defense export growth and $5.5 billion revenue in 2023, the Turks have risen to near the top of the second tier.

Second, arguably the most dynamic sector in the Turkish defense industry — unmanned systems — has yet to produce a Top 100 firm, but seems poised to do so moving forward. BAYKAR, makers of the TB2 Bayraktar and Akinci Unmanned Combat Aerial Vehicles, has become the standard bearer for Turkish defense innovation and operational impact across various global hotspots.

TAI produces high-quality drones as well, and a half-dozen other companies have established Turkey as an innovation and price-performance leader in the field. That five Turkish companies not centered on unmanned systems made the Top 100 makes clear that an understanding of Turkish defense needs to look beyond the headline-generating drones.

Third, such growth could not have happened without an expanding network of clients and partners for the Turkish defense industry; while indigenization has increased the milli ve yerli (locally/nationally produced) portion of domestic defense needs, globally significant firms require foreign markets and partnerships. Turkish defense sector firms — there are over 3,500 total — have built partnerships with Ukraine, the U.K., Pakistan, Gulf countries and many others.

The Turkish Ministers of Defense (Yasar Guler) and Defense Industry (Haluk Gorgun) addressed a bilateral Defense Industrial Base conference in Washington on the sidelines of the recent NATO summit, and touted the Turkish defense sector as young, dynamic, enjoying unique access in the Mideast, Africa, Balkans, Central and South Asia — and uniquely positioned to partner with U.S. firms.

Guler assessed during the conference that Turkish exports in the first half of 2024 showed continued growth, up 20% year on year.

An interesting bit of context for this year’s Top 100 is the directed efforts in Washington and Ankara to deepen and broaden defense cooperation between the two NATO allies. The Turkish American Business Council (TAIK, headed by Murat Ozyegin) and the American Turkish Business Roundtable (ATBR, led by retired Gen. James Jones) have convened two conferences in 2024 to bring U.S. and Turkish firms together to explore areas for collaboration and cooperation in the defense sector.

With the example of the recently approved F-16 deal and joint venture for 155mm artillery ammunition between Turkish and American firms, we might expect to see many more such joint ventures emerge.

The Turkish defense industry still faces growing pains and dilemmas, though. The International Institute for Strategic Studies noted in a recent study that the Turkish defense industry is at a crossroads: Having increased self-sufficiency and developed significant export capabilities through defense sector indigenization, it has developed a new dependence on sustained exports and defense industrial cooperation for advanced subsystems.

Substantial autonomy does not mean full independence in the defense sector but rather continued complex interdependence. This implies that continued growth will require proactive consultation and mutual compromise between Ankara, Washington and NATO allies in Europe.

Another check on growth has been the Turkish government’s struggles with inflation, which is currently subject to a significant campaign of monetary tightening. Upward pressure on interest rates from the battle against hyperinflation has made domestic bank loans less attractive for developing small firms into major defense industrial players.

One solution has been for such firms to pursue public listing rather than domestic bank or government financing.

Demand remains high in the global market for the solid price-performance balance that has typified Turkish defense products. That augurs well for the continued growth of the five current Top 100-member Turkish firms and those aspiring to join the club.

If 2024 sees progress in Ankara’s efforts to bring down inflation, continued macroeconomic stability and sustained Great Power Competition, this year’s strong performance from the Turkish national defense sector should be reprised or accelerated over the next twelve months.

Richard Outzen is a nonresident senior fellow at the Atlantic Council’s Turkey Program.

For years now, and with added urgency since Russia’s full-scale invasion of Ukraine in 2022, the DOD has been trying to expand access to a wider array of suppliers in pursuit of greater capacity, cost competition and technical innovation. The 2024 National Defense Industrial Strategy stated the DOD’s aim is to “accelerate the growth of a more diverse, dynamic, and resilient modern defense industrial ecosystem.”

Despite the DOD’s efforts to attract new suppliers and diversify the industrial base, results are barely noticeable in the data. The top 11 companies by fiscal 2023 defense revenue in the list are the same as they were in fiscal 2015 (excluding Chinese and Russian firms, and accounting for the RTX and L3Harris Technologies mergers).

Big dogs

These 11 firms have maintained a roughly 60% share of the total defense revenues of all non-Russian or Chinese companies on the Top 100 list each year, from FY15 to FY23 — a group that has grown less diverse through the RTX and L3Harris mergers.

Defense Department contract data mirrors this trend. The top nine companies in FY23 by defense contract obligations are the same as they were for FY15 (accounting for the RTX and L3Harris mergers). During that period, those nine companies accounted for roughly 40% of the cumulative U.S. defense contract value each year, barring the COVID-19 pandemic-related blip during the FY21-22 time frame. Only three other companies cracked the top nine during the intervening years, and two of these were Pfizer and Moderna, due to coronavirus-related spending.

Clearly, the commanding heights are occupied by a core group of highly competitive and entrenched players. But even expanding to look at the top 50 awardees of U.S. defense contract value shows a similar lack of change. The top 50 firms in FY15 have continuously accounted for an average of 58% of all spending each year through FY23.

Some new firms are gaining traction in the DOD market. For example, the selection of Anduril and General Atomics for the first increment of the collaborative combat aircraft program seems to indicate the DOD’s willingness to draw on relative newcomers, even in high-end areas normally the preserve of the primes.

But these players represent just a fraction of DOD spending. Anduril and General Atomics are privately held and do not publicly release financial information. Using DOD contract value data, General Atomics ($2.245 billion in FY23) ranks in the top 50, and Anduril ($240 million in FY23) is not among the top 100 for that fiscal year.

Defense acquisition spending is dominated by major platform and weapon systems contracts, and these deals continue to be led by a select group of top prime contractors. Roughly 70% of the FY25 procurement budget is for aviation, shipbuilding, ground vehicles, missile defense and missiles and munitions — areas that mainly consist of large programs of record.

The real impact of the DOD’s ongoing efforts is among smaller firms than can show up on Defense News’ Top 100 list. The DOD has expanded the channels through which new players can engage the department. The seemingly limitless array of venture capital-funded startups is evidence that firms think the DOD is worth the risk, even if the process is difficult.

But the number of newcomer firms that have grown to a substantial size through serving the DOD remains small — such as General Atomics, SpaceX, Palantir and, perhaps soon, Anduril — and they are exceptions to a much broader trend.

Going global

Indeed, the greatest activity in the Top 100 list has been outside the United States. This is due to both rising defense demand around the world and the increasingly competitive nature of global suppliers.

In the Top 100′s FY15 data, U.S. firms accounted for nearly 60% of the $356.7 billion in defense-related revenue. In this year’s list, for FY23, U.S. firms account for just 54% of the $603.9 billion in defense-related revenue.

What’s more, South Korea’s Hanwha shot from 38th place in FY15 to 19th in this year’s list. Likewise, German company Rheinmetall was 27th, but buoyed by Ukraine-related demand, the firm is now 20th. Israel’s Elbit Systems went from 26th to 22nd.

The latest list also includes additions that did not appear in last year’s version based in China, Germany, Turkey, South Korea, India, the U.K. and the U.S.

For China, domestic firms once again started appearing on the Top 100 list for FY18. The most recent time before that when a Chinese business appeared in the rankings was for fiscal 1999. From FY18 to FY23, Chinese firms’ share of the Top 100 defense revenue has hovered at an average of 18%.

Growth among major international companies is another reason it is unlikely that smaller U.S. suppliers will appear on the Top 100 list. However, the limited change to the makeup of the list belies the increased engagement of the DOD, with new suppliers beneath the surface.

Doug Berenson is a partner in the aerospace and defense practice at the consultancy Oliver Wyman, where Ian van Son is an associate.

On the other side of the coin — or the border — North Korea’s defense industry also has a new major customer: Russia.

A recent visit to Pyongyang by Russian leader Vladimir Putin attracted the world’s attention. Russia needs North Korean ammunition, while North Korea needs to send its labor force to Russia to gather information about defense technologies like intercontinental ballistic missiles, submarine-launched ballistic missiles and satellites.

In North Korea, about 500,000 workers and 300 defense industry factories exist in the Second Economy Commission, which oversees nearly all aspects of materiel production and sales. Most factories are located in the North and South Pyongan provinces, the North and South Hamgyong provinces, the Chagang province and the Kangwon province.

The defense sector makes up about 30% to 60% of North Korea’s total economy, or approximately $10 billion. About $700 million goes to nuclear development, and about $600 million goes to missile development.

Recently, North Korean media openly showed Kim Jong Un’s visit to defense industry factories.

Usually, the nation’s media does not report on defense industry facilities as such, describing them as ordinary factories. But the transparency this time represents how important Kim considers the sector.

Since 2022, Rodong Sinmun has run at least eight articles discussing 18 visits to defense industry factories. The openness and timing is significant, given Russia launched its full-scale invasion of Ukraine that year.

During this period, Kim has emphasized a desire to prepare for war and modernize the domestic industry’s weapons production processes.

This year, North Korea began reorganizing entities under the Second Economic Commission in order to achieve Kim’s directives. He appointed a new chairman of the Second Economic Commission, and has dropped mentions of tests for the country’s 240mm multiple rocket launcher as well as construction efforts to support the weapon’s production.

Kim’s recent interactions with Putin and his emphasis on North Korea’s defense industry amid the war has a clear strategic purpose.

For one, these moves are meant to serve as a response to security cooperation between the United States, South Korea and Japan.

Secondly, North Korea has benefited from providing arms to Russia during the war. Decades ago, during the Korean War, the Soviet Union supported the creation of the Korean People’s Army, and the Soviet Army was a role model for the North.

Now, North Korea is able to support Russia by sending ammunition and other conventional weapons. The partnership provides opportunities for North Korea’s labor force to travel to Russia to learn about advanced defense technologies.

North Korea considers its version of the K-defense industry to be an engine for economic development. From the North’s point of view, Russia is just the beginning, as other potential customers could follow suit.

Indeed, if North Korea accepts an invitation from Russia to join a Russia-China combined military exercise, this would be a great turning point for the government and a game changer to Northeast Asia’s security architecture.

The worst-case scenario would be the North’s export of weapons of mass destruction, including, but not limited to, nuclear war heads.

Kim’s ambition has grown beyond selling access to the Wonsan spa resort. Now, North Korea is seeking its own version of the K-defense industry.

Youngjun Kim is a professor at the Korea National Defense University and a nonresident fellow at the National Bureau of Asian Research think tank.

Overall, companies sought to deepen their innovation investments, and some benefited from stronger civilian sector market demand as well as continued People’s Liberation Army modernization developments.

However, allegations of corruption within China’s defense industrial base in 2023 led to leadership change and renewed calls for political loyalty among industry chiefs.

AVIC

Between 2022 and 2023, AVIC’s defense production-related revenue increased by 52.6% (45% in U.S. dollars, given the weaker yuan). Though the company ranks first in defense-related profitability from all Chinese defense-related, state-owned enterprises (SOEs) for the fifth year in a row, it also ranks second in this year’s Top 100 company ranking, coming in behind Lockheed Martin.

The company’s strong growth in 2023 was attributed to its main subsidiaries — Chengdu Aircraft Industrial Group Co. Ltd., Xi’an Aircraft Industry Group Company Ltd. and Shenyang Aircraft Company Ltd. — having exceeded targets in their annual batch production and delivery missions.

In addition to producing new technologies, the PLA continues to replace legacy aircraft, such as the J-7 fighter jets, with new ones. New production lines are also being implemented to improve production and quality.

CSSC Group

Ranking second in this year’s list of Chinese SOEs, the China State Shipbuilding Corporation Ltd. Group’s defense-related revenue grew by 25.7% year-on-year (19% in U.S. dollars).

The group’s results have been the largest year-on-year growth since the merger of China’s two largest shipbuilding conglomerates in 2018, and reflect the continued strength of China’s shipbuilding sector within the global market. In particular, the company refers to growing demand for “green” ship orders in the civilian shipbuilding sector.

In addition to strong demand, CSSC reports having benefited from “relatively friendly” global market improvements, such as ship and steel prices, as well as exchange rates.

At its 2024 annual company work conference in January, priorities for the company in 2024 were outlined as: focusing on the primary responsibility of military industry; strengthening and improving international competitiveness; increasing volume and improving quality; accelerating S&T self-reliance; and accelerating labor productivity of all employees, deepening the governance of loss-making enterprises and disposing of inefficient ones.

NORINCO

Though NORINCO still ranks third in the Chinese defense SOEs list and 9th in Defense News’ Top 100, the company’s year-on-year defense-related revenue dipped by 2.6% (8% in U.S. dollars).

In 2023, the company acquired two Chinese subsidiaries linked to universities: Xi’an Jiaotong University Aisheng Group and Beijing Beihang University’s Tianyu Changying UAV Technology Co. Ltd.

Both companies specialize in unmanned aerial vehicle research and development, and NORINCO hopes they will in turn increase the company’s “new war industries” offering — in addition to its current supply — to the PLA’s ground forces.

For example, in 2023 the PLA deployed NORINCO’s PHL-16 Multiple Launch Rocket System in the 73rd Group Army of the Eastern Theatre Command.

CSGC

Further in the land domain, China South Industries Group fared slightly better, with a 7.6% year-on-year growth (2% in U.S. dollars) result for its defense-related revenue.

The company reported a significant improvement in production quality following internal reforms focused on optimizing industrial layout and strengthening the military ecosystem, though no details were provided.

CSGC highlighted that its combat equipment in particular had a 100% pass rate for the first inspection of major products. A total of 208 institutes and its Jianshe Group have passed third-level maturity evaluations. The company’s growth was driven by its civilian automobile sector, particularly in electronic vehicles.

As noted by other defense-related SOEs, CSGC has invested heavily in innovation, including adding three new innovation centers. As a result, the company reports “breakthroughs” in more than 30 key technologies, including light alloy multi-field pressure casting systems and wire-controlled chassis.

In addition to developing its own R&D capabilities, CSGC has also partnered with other Chinese firms such as Huawei, Horizon Robotics and CATL.

CETC

CETC came in fourth in China’s defense-related SOE rankings for a third consecutive year, reporting 5.6% year-on-year growth (0% in U.S. dollars) despite being added to the U.S. Commerce Department’s Entity List for supporting China’s military modernization and PLA aerospace programs following the 2023 Chinese balloon incident in the United States.

In order to withstand U.S. pressures, CETC absorbed state-owned digital services provider China Hualu Group — its second takeover in two and a half years.

China’s state-owned Assets Supervision and Administration Commission has promoted the merging of SOEs in critical sectors in order to boost efficiency, competitiveness and innovation.

In CETC’s case, results have been mixed. Some of CETC’s other parent company subsidiaries noted small losses in the first three quarters of 2023, such as Chips Technology Inc. and the recently acquired Potevio Co. Ltd.

Others, however, such as CETC’s Cyberspace Security Technology Co. Ltd, which predominantly focuses on data security and cryptography technology, reported increases throughout the first three quarters of 2023.

Overall competitiveness has reportedly been improved in recent years due to integration between industrial chains and a focus on R&D investment, though the latter has also come at a financial cost. The company spends roughly 11.8% of its profits on R&D investment, which is expected to grow in the future.

Nevertheless, the company’s dominant position in providing military electronics — at a time when the PLA continues to focus on achieving informatization and intelligentization — means CETC’s revenue has further room to grow.

CASC & CASIC

China’s Aerospace Science and Technology Corporation (CASC) reported a surprising 77% year-on-year loss (79% in U.S. dollars) in 2023. The company’s defense-related revenue represented less than 5% of AVIC’s 2023 defense revenue. CASC ranked 52nd in this year’s Defense News Top 100, a drop of 37 places.

The company reported that its business was affected by floods in North China, which resulted in asset losses, equipment and infrastructure maintenance requirements and other related expenses.

Some contracts were delayed in delivery. And larger market factors, such as intensified market competition and rising production costs, also played a role.

Elsewhere in the aerospace sector, CASIC has not yet published its annual report.

China’s space sector and the PLA Rocket Force experienced political challenges in 2023.

The PLA Rocket Force and Equipment Development Department were at the center of a corruption investigation, in which multiple high-level officials were implicated.

China’s defense industrial base has similarly been investigated. CASC’s former Chairman Wu Yansheng’s membership in the Chinese People’s Political Consultative Conference (CPPCC) National Committee — China’s top political advisory body — was revoked at the end of 2023. He was replaced by Chen Mingbo.

CASIC’s chairman Yuan Jie also stepped down in 2024 after the company’s Vice President Wang Changqing was removed from the CPPCC National Committee.

Liu Shiquan, chair of NORINCO, was also stripped of his CPPCC seat.

Though these industry leaders have not been officially implicated in the corruption investigation, the decisions to strip them of their CPPCC seats is a sign that Beijing is increasing its scrutiny of a sector that is of key importance to its defense missions.

Meia Nouwens is a senior analyst specializing on Chinese security and defense policy at the International Institute for Strategic Studies.

When the fighter, dubbed Kaan, landed 13 minutes later, a mob of revelers flooded the flight line to celebrate with hugs, applause and cheers — not only for the jet but what it represented.

Turkey had flown its first homemade prototype fighter jet, which manufacturer Turkish Aerospace Industries says will have fifth-generation stealth capabilities and the weapons capacity to rival or surpass the F-35 Joint Strike Fighter.

Kaan’s debut came almost 13 years after Turkey began developing its own combat aircraft, and four years after the U.S. kicked Turkey out of the F-35 program over the country’s plan to buy S-400 air defense systems from Russia. That punishment failed to deter Turkey from pursuing the S-400, and instead of the F-35, the country focused on its own indigenous fighter jet.

Turkey’s efforts to go it alone have proved fortuitous for TAI. In Defense News’ latest Top 100 list, which ranks companies around the world by defense revenue, TAI jumped from 58th place to 50th as its defense revenue ballooned nearly 50% to $2.2 billion in fiscal 2023.

TAI isn’t the only firm seeing rising revenues. As Russia presses its invasion of Ukraine, Israel attacks Hamas in the Gaza Strip, the U.S. and several allies fight Yemen-based Houthi rebels, and tension over Taiwan’s independence and disputed territory in the South China Sea proliferates, nations are increasing their defense spending — and businesses are seeing their revenues climb.

“There’s definitely a trend there,” said Stuart Dee, a European defense research leader at the think tank Rand. “This rapid and marked re-securitization with three fronts of potential geopolitical instability — Ukraine; Israel, Gaza and the Red Sea; and then Taiwan — what we’re seeing all at once is a whole lot of capability backfilling going on, right across the board.”

A piece of the pie

Defense News each year ranks the top defense contractors for its Top 100 list, by collecting and tallying information on firms’ revenues from the companies, earnings reports, analysts and other research.

Mega-firms based in the U.S., such as Lockheed Martin, RTX, Northrop Grumman, General Dynamics and Boeing, remain some of the largest defense companies worldwide, as reflected in this year’s list. But there are signs that non-U.S. businesses are playing greater roles across the sector.

For example, Aviation Industry Corp. of China is now ranked as the second-largest defense firm in the world, behind only Lockheed Martin. The Asian business saw its defense revenue jump by 45% from FY22 to FY23.

Over the last five years, the worldwide defense revenue share of Asia-based companies (including those in Russia) that have made the Top 100 rankings has fluctuated, but did increase from 16% to 21% from last year’s list to this latest version.

The share for U.S.-based firms also fluctuated over the last five years, but declined from 59% to 54% from last year’s list to this year’s iteration.

For Europe-based businesses, including Turkey and Ukraine, the defense revenue share didn’t change much over the last five years. In FY23, they took up 21% of the worldwide pie.

Notably, the Ukrainian Defense Industry’s defense revenue, which amounted to about $651 million in FY20, has skyrocketed to $2.2 billion. The company formerly known as Ukroboronprom jumped 16 spots on the most recent Top 100 list to 49th place.

‘Wartime footing’

The rising defense revenues among Asian and European firms likely reflect “an enhanced understanding of security challenges in the global environment,” according to Cynthia Cook, who leads a defense industry research team at the Center for Strategic and International Studies think tank.

Russia’s invasion of Ukraine pushed NATO members to spend more on military efforts, she told Defense News.

In 2014, the year Russia annexed Crimea from Ukraine, just three NATO allies met guidelines to spend at least 2% of their respective gross domestic products on defense; that number is expected to reach 23 this year, according to the alliance, which based its findings on 2015 rates.

And NATO Secretary General Jens Stoltenberg said in February that European members will spend a cumulative $380 billion on defense this year, reaching a new record. In comparison, using the same rates, European allies spent $250 billion in 2014.

“The increase in spending and the growth of European defense contractors is an important start for the rebuilding of their industrial base, which will be necessary in any future conflict,” Cook said. “European nations, especially places like Poland, are looking to the right — to the Russian threat on their immediate border. And [Russian President Vladimir] Putin has not ever said anything like: ‘Well, we’re just going to take over Ukraine and then sit tight.’ He’s pretty bold in his territorial ambitions. He’d like to do a Soviet reunion.”

And in Asia, Cook noted, Japan and South Korea are increasing their defense spending in light of potential threats from China and North Korea.

“China’s industrial base is on a wartime footing if you look at things like how many ships they’re producing and so forth,” she said.

But it’s not just American allies investing in defense, she added. After initial setbacks in Ukraine, Russia has poured money into reconstituting its military — with success that surprised some Western observers.

“Russia has ramped up its production,” U.S. Defense Secretary Lloyd Austin said in April. “All of their defense industry really answers directly to the state, so it’s easier for them to do that a bit quicker.”

Shopping local

Global military spending has skyrocketed in recent years, reaching a record $2.4 trillion in 2023, according to an April report from the Stockholm International Peace Research Institute. That was the ninth straight year in which defense spending increased.

“Defense spending is up,” Rand’s Dee said. “But at the same time, what that is being spent on is increasingly national supply chains [and] local champions” so nations can be more self-reliant.

Take Turkey, for example. In the past, he said, the country would have bought more off-the-shelf military equipment from foreign providers, primarily from the U.S. But as Turkish President Recep Tayyip Erdoğan’s administration pivots away from dependence on the U.S. as a supplier, the nation has invested more into its domestic industrial base, Dee added.

This is resulting in Turkey taking a “quite interesting hedged relationship” with the U.S. when it comes to military imports, he said. Turkey still relies on foreign military sales for much of its “bread and butter” military capabilities, he added, while also investing in next-generation capabilities with an eye on exports.

“If you went back 10 years ago, Turkey was an outright defense capability importer,” Dee said. “You’re starting to actually see Turkey transition to being a defense exporter for the first time.”

Five Turkish firms made the 2024 list, with Dee specifically pointing to TAI and the missile manufacturer Roketsan as notable examples of local growth. The latter jumped from 80th place on the list to 71st.

And while drone maker Baykar did not respond to Defense News’ requests for data, nor did it publicly share revenue figures by press time, the company touts its abilities as an exporter to 34 nations — including Ukraine, whose use of the Bayraktar TB2 drone was an early success story in its war against Russia.

A similar pattern is playing out in the United Kingdom, Dee noted. While the U.K. military flies Boeing and Lockheed Martin aircraft, such as Chinook helicopters and F-35s, its sixth-generation fighter program, dubbed Tempest, is largely a British effort.

U.K.-based BAE Systems is taking the lead among industry participants, which also include MBDA, Rolls-Royce and Leonardo. BAE Systems landed at the 7th spot on the Top 100 list; Rolls-Royce the 23rd; and Leonardo the 14th.

“A lot of the [British] next-generation capability investment across the board is going to … developing indigenous capability, which is directly benefiting BAE Systems, Rolls-Royce, as examples,” Dee said.

For its part, South Korea’s industrial base has always been robust, Cook said, and is also a notable exporter of military equipment.

In 2022, Poland struck a $5.8 billion deal to buy Korea Aerospace Industries-made fighter jets, tanks from Hyundai Rotem Co., and howitzers and vehicles from Hanwha Defense. Also in that year, South Korean President Yoon Suk Yeol pledged to make his nation one of the top weapons suppliers in the world.

Three South Korean firms made the list, with Hanwha ranked in 19th place; LIG Nex1 in 58th; and Hyundai Motor Co., of which Hyundai Rotem is an affiliate, in 73rd.

And it’s not only local economic and military issues that are driving further globalization of the defense market. Political turmoil in Washington, which for months stalled U.S. rearming of Ukraine, jolted some European allies into investing more in their own defense industries, according to Saab CEO Micael Johansson.

Johansson in February described America’s wavering on Ukrainian support as “quite scary to see,” adding that Europe must fill any gaps. He called for European governments to make long-term financial commitments with local defense firms to build new production sites and capacity — and not let indigenous capabilities wither, as occurred after the Cold War.

“I am prepared to take risk, but it has to be in some sort of handshake with governments if I’m going to do more in terms of new sites, high capacity,” Johansson said. “We can’t afford to dismantle things once more.”

Saab’s defense revenue grew 18% in FY23 to nearly $4.4 billion, bolstered by a $102 million deal with Boeing to build fuselages for the T-7 trainer aircraft and a $1.2 billion contract to an undisclosed customer to provide Carl-Gustaf recoilless rifles. The Swedish firm made the Top 100 list at 29th place.

In nearby Norway, Kongsberg’s defense revenue jumped 23% to $1.7 billion in FY23. The company, which ranked 59th, builds National Advanced Surface-to-Air Missile Systems, which have been sold or donated to Ukraine to bolster its defense against Russia.

A worldwide defense industry that relies less on U.S. firms could be an overall positive development — even for American companies, Dee said.

The defense-industrial base, while vast, only has so much capacity. For instance, the sector has struggled to produce munitions, such as 155mm shells, at the rate of demand. And so, more companies serving as major players can lead to more capacity, he explained, and more competition.

“The relative lack of competition in the defense market is one of the primary causes that is often pointed out for consistent cost overruns,” Dee said. “More competition, within the confines of export control capacity, is a good thing.”

But a more globalized defense-industrial base could create problems if systems and ammunition created in different countries can’t function well together, Cook noted.

“We want systems to interoperate, and we want ammunition made in one country to fit into the systems of others,” she said. “That is just hard. You have to set joint requirements, you have to set standards. What do you do with the older systems that may require specific ammo? Do you retrofit them? There’s a lot of questions to think about.”