Middle East arms producers feature in record numbers in a list of the top 100 manufacturers globally, with demand driven by conflicts, particularly the Israel-Gaza war that raged for more than two years.
For the first time, nine of the top 100 arms companies were based in the Middle East in 2024, with combined revenues of $31 billion, according to a new report by the Stockholm International Peace Research Institute.
The eight of these Middle East producers for which consistent data was available saw arms revenue grow 14 per cent between 2023 and 2024.
“In 2024, demand linked to conflicts, especially the wars in Gaza and Ukraine, continued to be a major driver of arms revenue growth for Middle Eastern companies,” the report found.
These were based in Israel, the UAE and Turkey. The companies are: Israel's Elbit Systems, the state-owned Israel Aerospace Industries, and Iron-Dome system developer Rafael and the UAE's state-owned conglomerate Edge Group. There are four from Turkey including its primary aerospace manufacturer Turkish Aerospace Industries, private-company Baykar, developer and rockets exporter Roketsan, small arms and ammunitions company and MKE, and the country's largest defence electronics company Aselsan.
Edge, the UAE's largest defence conglomerate, ranked 37th out of 100 companies globally, and recorded arms revenues of $4.7 billion in 2024, Sipri said. The company had been excluded from the top 100 since 2020 due to a “lack of publicly available data”.
The UAE is developing its domestic defence manufacturing capabilities for local procurement by its armed forces and to address regional threats. Edge is also increasingly expanding into export markets, a strategic shift, as the Emirates has traditionally been an arms importer.
Global conflicts have spurred a faster pace of product development, entry into market and delivery amid the defence contractor’s push to boost sales to foreign buyers, Hamad Al Marar, managing director and chief executive of Edge, told The National this month.
Israel gets deals despite Gaza war backlash
The three Israeli arms companies in the ranking increased their combined arms revenues by 16 per cent to $16.2 billion in 2024, according to Sipri.
Israel’s war in Gaza and, since October's ceasefire, its ongoing military operations there, together with high global demand for Israeli military equipment − such as advanced UAV and counter-UAV capabilities − drove up the companies' revenues.
“The growing backlash over Israel’s actions in Gaza seems to have had little impact on interest in Israeli weapons,” Zubaida Karim, researcher with the Sipri Military Expenditure and Arms Production Programme, said. “Many countries continued to place new orders with Israeli companies in 2024.”
Elbit Systems, ranked 25th, reported that 65 per cent of its $22.6 billion order backlog was from international contracts, including deals with European countries for long-range UAVs. Elbit was also awarded more than $5 billion in new contracts by the Israeli Defence Ministry following the start of Israel’s war in Gaza in October 2023.
Similarly, in 2024, Rafael, which ranked 34th, increased its arms revenues by 23 per cent to $4.7 billion. The value of its order backlog rose to $17.8 billion as Iran’s large-scale missile attacks on Israel in April and October 2024 pushed demand for Rafael’s military equipment, particularly its missile defence systems, to “unprecedented levels”, the report said.
Israel Aerospace Industries, ranking 31st, remained Israel’s second-largest arms producer.
Record arms revenues globally
The combined arms revenues of the world’s 100 biggest arms-producers rose nearly 6 per cent in 2024 to $679 billion, the highest level recorded by Sipri, as governments rushed to modernise and expand their arsenals.
Demand was boosted by wars in Gaza and Ukraine, geopolitical tensions and ever-higher military expenditure by governments, the report found.
European and US arms companies drove most of the global increase in revenue, though all other regions recorded growth, except Asia and Oceania. That regional decline was due to a combined 10 per cent drop in arms revenues among the eight Chinese arms companies in the top 100.
Czech company Czechoslovak Group recorded the sharpest percentage increase in arms revenues of any top 100 company in 2024. The revenues jumped 193 per cent to $3.6 billion, which the company attributes to Ukraine demand.
Ukraine’s own JSC Ukrainian Defence Industry increased its arms revenues by 41 per cent to $3 billion.
Russian arms revenues grew despite international sanctions leading to a shortage of parts.
The two Russian arms companies in the top 100, Rostec and United Shipbuilding Corporation, increased their combined arms revenues by 23 per cent to $31.2 billion. Domestic demand was enough to more than offset the revenue lost due to falling arms exports, Sipri said. However, a shortage of skilled labour could slow production and limit innovation, it added.
US arms companies' revenue grew in 2024 by 3.8 per cent to $334 billion but widespread delays and budget overruns plague development and production of key programmes like the F-35 combat aircraft, the report said.
Shortage in critical minerals
Restrictions on critical minerals from China amid the US trade war and from Russia due to international sanctions are a major risk to operations of arms producers, Sipri said.
Controlling about 60 per cent to 70 per cent of rare earth mining and about 90 per cent of processing, China holds a near-monopoly on the supply chain.
“Should they continue to escalate, the tit-for-tat export restrictions seen over the past few years risk triggering serious supply bottlenecks at a time of surging global demand for military equipment,” the report said.
Efforts to increase mining and processing capacity will take years to reach the scale required to meet demand.
“Current shortages will continue to extend production timelines and inflate procurement costs that in some cases may already be well over budget,” Sipri said.
SpaceX debuts in top 100
Elon Musk's SpaceX, ranked 77th, appeared in Sipri's top 100 ranking for the first time, after the company's arms revenues more than doubled year-on-year to $1.8 billion in 2024.
Mr Musk has billions of dollars in Pentagon contracts, primarily for his SpaceX and Starlink enterprises.
