Global Arms Revenue Hits Record $679B as Geopolitical Tensions Drive Demand

The global defence industry has reached unprecedented heights, with the world's top 100 arms manufacturers recording US$679 billion in revenues for 2024, marking a 5.9% increase from the previous year. This surge, driven primarily by the conflicts in Ukraine and Gaza, represents the highest level ever documented by the Stockholm International Peace Research Institute (SIPRI).

The data reveals a fascinating regional divergence that underscores shifting geopolitical dynamics. European arms manufacturers experienced the most robust growth at 13%, with revenues reaching US$151 billion across 26 companies. This expansion reflects the continent's urgent recalibration of defence priorities following Russia's invasion of Ukraine.

US Maintains Dominance Despite Production Challenges

American defence contractors continue to dominate the global landscape, with 39 companies in the top 100, including sector leaders Lockheed Martin, RTX, and Northrop Grumman. Combined US revenues reached US$334 billion, representing nearly half of global totals despite a modest 3.8% growth rate.

However, the American defence sector faces significant operational headwinds. Budget overruns and delivery delays plague flagship programmes including the F-35 fighter jet and Columbia-class submarine projects, highlighting the sector's struggle to match demand with production capacity.

China's Defence Sector Stumbles Amid Corruption Scandals

In a striking contrast to global trends, Asia-Oceania was the sole region experiencing revenue decline, with the 23 regional companies posting a 1.2% drop to US$130 billion. This downturn primarily reflects challenges within China's defence establishment, where corruption allegations have led to postponed or cancelled contracts worth billions.

"A host of corruption allegations in Chinese arms procurement led to major arms contracts being postponed or cancelled in 2024," noted Dr Nan Tian, Director of SIPRI's Military Expenditure and Arms Production Programme. This development adds uncertainty to Beijing's military modernisation ambitions, potentially creating strategic opportunities for regional competitors.

Supply Chain Vulnerabilities Expose Strategic Dependencies

The conflict has exposed critical supply chain vulnerabilities across the Western defence industrial base. European manufacturers like Airbus and Safran, previously sourcing half their titanium from Russia, have been forced into costly supply chain restructuring. Meanwhile, Chinese export restrictions on critical minerals have prompted companies including France's Thales and Germany's Rheinmetall to warn of increased production costs.

These disruptions highlight the strategic importance of supply chain diversification, a lesson particularly relevant for ASEAN nations seeking to balance economic efficiency with security considerations.

Regional Winners Emerge from Global Turbulence

Despite broader Asian market challenges, Japanese and South Korean defence manufacturers have capitalised on European demand, demonstrating the potential for nimble regional players to benefit from global supply chain reconfigurations.

Middle Eastern arms companies, particularly Israeli firms, have shown remarkable resilience. The three Israeli companies in the top 100 achieved 16% revenue growth, reaching US$16.2 billion combined, suggesting that geopolitical controversies have had minimal impact on commercial demand for their defence technologies.

The Czech Ammunition Initiative exemplifies how smaller nations can leverage strategic positioning, with Czechoslovak Group achieving a remarkable 193% revenue increase to US$3.6 billion through artillery shell supplies to Ukraine.

Implications for Regional Stability

This defence spending surge reflects a fundamental shift in global security architecture, with implications extending far beyond traditional defence contractors. The data suggests that nations prioritising efficient governance and technological innovation will be best positioned to benefit from this new security paradigm.

For ASEAN member states, these trends underscore the importance of maintaining strategic autonomy while building robust defence industrial partnerships that can adapt to evolving geopolitical realities.