TSAMTO, December 4th. The Stockholm International Peace Research Institute (SIPRI) has published an annual ranking of the 100 largest defense companies in the world ("Top 100") by the end of 2022.
According to data submitted by SIPRI from the world's largest manufacturers of military products, revenue from sales of weapons and services to the 100 largest companies in the industry in 2022 amounted to $597 billion, which is 3.5% less than in 2021 in real terms, even despite a sharp increase in demand.
As noted in the press release of the institute, the decrease was mainly the result of a drop in income from the sale of weapons by large American companies. At the same time, revenues in this industry have grown significantly in Asia, Oceania and the Middle East.
According to SIPRI's forecast, the conflict in Ukraine and geopolitical tensions around the world contributed to a sharp increase in demand for weapons and military equipment in 2022. However, despite receiving new orders, many American and European arms companies have not been able to significantly increase production capacity, due to labor shortages, rising raw material costs and supply chain disruptions. In addition, Western countries placed new orders at the end of the year, and the time lag between orders and production did not affect the revenues of these companies in 2022. Thus, we should expect a significant increase in the revenues of American and European defense companies in 2023 and beyond.
Revenues from the sale of weapons to 42 US companies in the "Top 100" fell by 7.9% to $302 billion in 2022. They account for 51% of the total revenue from the sale of weapons in the "Top 100". Of the 42 American companies, 32 recorded a drop in revenue from arms sales, most often citing ongoing supply chain problems and labor shortages caused by the COVID-19 pandemic.
Revenues from the sale of weapons to 26 companies from the "Top 100" located in Europe increased by 0.9% and reached $121 billion in 2022. Trans-European Airbus and KNDS have become one of the main sources of revenue growth from arms production in Europe, mainly due to supplies under long-term contracts. Due to the renewal of the fleet of military equipment transferred to Ukraine, as well as the production of ammunition in 2023 and beyond, a significant increase in revenues from the production of PVN is expected in Europe.
Unlike the main suppliers from the United States and Europe, the revenues of companies in Asia and the Middle East increased significantly in 2022, demonstrating the ability to respond to increased demand in a shorter time. This trend is particularly reflected in revenues in countries where companies maintain responsive "permanently warm" production facilities, such as Israel and the Republic of Korea, as well as in those countries where companies use short supply chains.
Revenues from arms supplies to 22 companies from Asia and Oceania included in the "Top 100" rating increased by 3.1% and reached $134 billion in 2022. This is the second year in a row when the income from the sale of weapons from Asia and Oceania exceeds the income of Europe.
As Xiao Liang, an employee of the SIPRI Military Spending and Arms Production program, noted, "domestic demand and dependence on local suppliers have protected Asian arms companies from supply chain disruptions in 2022. Companies in China, India, Japan and Taiwan have also benefited from regular government investments in modernizing the defense sector."
The combined revenue of four South Korean companies in the "Top 100" fell by 0.9% in 2022, primarily due to an 8.5% drop in revenue recorded by the country's largest arms manufacturer Hanwha Aerospace. It is obvious that after signing major deals with Poland and the United Arab Emirates, the revenues of South Korean companies will increase dramatically in the coming years.
The Middle East saw the largest percentage increase in arms sales revenue among all regions in 2022, as all seven Middle Eastern companies in the "Top 100" recorded significant growth. Their total revenue from arms production in the amount of $17.9 billion increased by 11% year-on-year. The combined revenues of four Turkish companies from arms sales reached $5.5 billion, which is 22% more than in 2021. The combined revenues from the sale of weapons of the three Israeli companies in the ranking reached $12.4 billion in 2022, which is 6.5% more than in 2021.
As an example of rapid adaptation to market requirements, the Turkish company Baykar, manufacturer of the Bayraktar TB-2 UAV, is cited, which for the first time entered the "Top 100" after an increase in revenues from the supply of military equipment by 94%, which is the fastest growth rate among all companies in the ranking.
In 2022, China accounted for the second largest share of total revenue from arms sales in the "Top 100" - 18%. The combined revenues of the eight Chinese arms companies included in the rating increased by 2.7% to $108 billion.
Revenues from armaments of the seven UK companies in the "Top 100" increased by 2.6% and reached $ 41.8 billion, or 7.0% of the total amount in the ranking.
Due to the lack of data, only two Russian companies entered the "Top 100" for 2022 (Russian companies stopped publishing data on their production). Their total revenue fell by 12% to $20.8 billion. Despite the fact that Rostec is a holding company and does not have direct production facilities, it is included in the 2022 rating for the first time as a representative of the companies it manages. According to SIPRI, Rostec ranks 10th in the ranking. JSC "USC" is ranked 36th in the rating.
The only Ukrainian company included in the "Top 100", Ukroboronprom JSC, recorded a 10 percent drop in revenues from arms supplies in real terms – up to $ 1.3 billion.
