According to a report by the Stockholm International Peace Research Institute (SIPRI), the total revenue from arms and military services of the world's 100 largest arms companies reached 632 billion USD in 2023, an increase of 4.2% over the previous year.

Although revenue has declined in 2022 as arms makers face ramping up production to meet surging demand, many companies have made efforts to increase output in 2023, according to the report's authors.

In a clear sign of the surging demand, for the first time in history, all 100 major arms companies had revenues exceeding $1 billion.

“Arms sales increased sharply in 2023 and this trend is likely to continue in 2024,” said Lorenzo Scarazzato, a researcher on military expenditure and arms production at SIPRI.

He also stressed that the revenue of the top 100 arms companies has not yet fully reflected current demand and many companies are recruiting, which shows that they are optimistic about future revenue prospects.

The institute also said smaller companies have done better in meeting demand from conflicts in Gaza and Ukraine, as well as rising tensions in East Asia and rearmament programs in other regions.

“Many of these companies specialize in a particular component or develop systems that require special supply chains, allowing them to react quickly,” said Nan Tian, ​​director of SIPRI’s arms production and military expenditure programme.

Among major manufacturers, US companies saw sales increase by 2.5% and accounted for nearly half of global arms sales, with 41 US companies in the top 100. However, the world's two largest arms companies, Lockheed Martin and RTX (formerly Raytheon Technologies), reported slight declines in revenue, of 1.6% and 1.3%, respectively.

These giant companies often rely on complex and multi-layered supply chains, making them vulnerable to supply chain challenges in 2023, Tian said.

In Europe, arms manufacturers’ revenues rose by an average of just 0.2%, but some major groups are still fulfilling old contracts, which means that revenues do not reflect the growth in orders. European arms manufacturers have seen strong growth in demand for ammunition, artillery and air defense systems, especially in connection with the conflict in Ukraine.

Sales of Russian arms corporations increased sharply, mainly thanks to a 49% increase in Rostec's revenue, with the combined revenue of the two Russian corporations in the ranking increasing by 40%.

In the Middle East, arms companies also benefited from the conflicts, with sales rising by an average of 18%. Israeli and Turkish manufacturers saw strong sales, with three Israeli companies posting record sales and three Turkish companies, notably Baykar, seeing strong growth thanks to demand from Ukraine and Turkish defense investments.

In Asia, the rearmament was evident in South Korea and Japan, with South Korean companies posting average revenue growth of 39% and Japanese companies 35%. In contrast, Chinese arms makers saw a modest 0.7% increase in revenue “amid a slowing economy,” although their total revenue still reached $103 billion.

Ngoc Anh (according to Fortune)