Saudi Arabia Defense Market

Saudi Arabia Defense Market is growing at a compound annual growth rate (CAGR) of 4.8% during the forecast period (2023-2030).

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Major Saudi Arabia Defense Market Drivers

The growth of Saudi Arabia Defense Market is anticipated to rise due to an increase in government expenditure, a rise in geopolitical issues, and an increase in collaboration between key companies. The military expenditure of Saudi Arabia was expected USD 75 billion during 2022, making it the largest buyer across the Middle East and the 5th largest spender across the globe. Nearly, 80% of its arms imports are originated from the United States, as per the Stockholm International Peace Research Institute. With defense spending constituting 724% of the country’s GDP during 2022. Saudi Arabia held the 2nd highest global military expenditure as a ratio of GDP. 

Saudi Arabia’s pursuit of localizing defense manufacturing has seen substantial progress in the present period, although the initiatives to establish a homegrown military industry trace back to the mid-1960s. Faced with the challenge of lacking an improved technological industrial base and a skilled national workforce, Riyadh implemented offset programs as a strategic approach to drive indigenous military industrialization. Offset programs serve as a type of countertrade, focusing on alleviating the economic impact of procurement deals by mandating international contractors to invest in the importing country’s economy. In Saudi Arabia, these programs are predominantly aimed at technology transfers and training for local workers. Despite only allocating 2% of military spending to indigenous defense firms in 2017, Saudi Arabia has been functioning to advance its localization targets by restructuring the domestic defense landscape and refitting its business approach to the military sector. 

Moreover, as part of the Vision 2030 economic diversification program, Saudi Arabia targets the localization of 50% of its military procurement by 2030. This endeavor is overseen by two key military-industrial entities. The General Authority for Military Industries and Saudi Arabian Military Industries play a direct contracting role with foreign companies positioning a strategic move toward accomplishing greater self-sufficiency in the country’s defense industry. SAMI’s CEO, Walid Abukhaled, has consistently articulated the company’s ambition to rank among the top 25 defense companies by 2030. He highlights the role of foreign partnerships and joint ventures as crucial pathways for the rapid growth of SAMI and the wider Saudi local defense industry. Despite prevailing legislation in Saudi Arabia addressing defense procurement, in practice, much of it is formalized and is typically settled on a case-by-case basis.

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In 2019, GAMI introduced the Industrial Participation Program (IPP), succeeding Saudi Arabia’s Economic Offset Program. The IPP is designed to improve the local military industries sector by expanding into value-added segments. Its objectives include establishing a network of services and technical support, propelling strategic partnerships with international companies, facilitating technology transfer, helping SMEs participate in the local supply chain, and developing a pool of trained professionals for precise industries. GAMI is strategically concentrating its localization endeavors on land-based systems, considering their relatively easier production and flexibility in alignment with cash flow dynamics, GAMI places special stress on the robust need for aircraft parts. Key projects outlined in the Ministry of Finance’s 2023 budget include facility construction at the King Salman Airbase, relocation, and establishment of the King Faisal Air Academy, and the upgrading of the National Guard Ministry.  

Top Market Players

Various notable players operating in the market include Saudi Arabian Military Industries, Lockheed Martin Corporation, The Boeing Company, BAE Systems PLC, Raytheon Technologies Corporation, Northrop Grumman Corporation, General Dynamics Corporation, Leonardo SpA, Airbus SE, Almaz-Antei Corporation JSC among others.

Segments covered in the Report:

The Saudi Arabia Defense Market has been segmented on the basis of Type, Operation and Platform. Based on the Type, the market is segmented into Air-Based Defense Equipment, Sea-Based Defense Equipment, Land-Based Defense Equipment, Defense Equipment Maintenance, Repair and Overhauling Services, Defense Support and Auxiliary Equipment. Based on the Operation, the market is segmented into Autonomous Defense Equipment, Manual. Based on the Platform, the market is segmented into Airborne, Land, Naval

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Market Segmentation

Saudi Arabia Defense Market by Type

• • Air-Based Defense Equipment
  • Sea-Based Defense Equipment
  • Land-Based Defense Equipment
  • Defense Equipment Maintenance, Repair and Overhauling Services
  • Defense Support and Auxiliary Equipment

Saudi Arabia Defense Market by Operation

• • Autonomous Defense Equipment
  • Manual

Saudi Arabia Defense Market by Platform

• • Airborne
  • Land
  • Naval

Saudi Arabia Defense Leading Market Players (Option 5: As a part of the free 25% Customization – Profiles of 5 Additional Companies of your Choice)

• • Saudi Arabian Military Industries
  • Lockheed Martin Corporation
  • The Boeing Company
  • BAE Systems PLC
  • Raytheon Technologies Corporation
  • Northrop Grumman Corporation
  • General Dynamics Corporation
  • Leonardo SpA
  • Airbus SE
  • Almaz-Antei Corporation JSC