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US Firms Recorded 51% Share in Global Arms Revenues in 2022: SIPRI

Revenues of arms companies in Asia and Oceania and West Asia increased substantially compared to major US and European suppliers.
Revenues of arms companies in Asia and Oceania and West Asia increased substantially compared to major US and European suppliers.

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Forty-two American companies accounted for 51% of the total arms revenue of the top 100 firms in 2022 despite a 3.5% fall in revenues from sales of arms and military services compared to 2021.

According to the latest Stockholm International Peace Research Institute (SIPRI) report, the 100 largest companies in the industry earned revenues totalling $597 billion in 2022 due to production challenges and backlog and falling arms revenues among major companies in the United States.

Among top 100 companies, the arms revenues of 42 American companies fell by 7.9% to $302 billion in 2022 with 32 recording a fall in year-on-year revenue due to supply chain issues and labour shortage caused by the pandemic.

We are beginning to see an influx of new orders linked to the war in Ukraine and some major US companies, including Lockheed Martin and Raytheon Technologies, received new orders as a result,” said SIPRI senior researcher Nan Tian.

However, because of these companies’ existing order backlog and difficulties in ramping up production capacity, the revenue from these orders will probably only be reflected in company accounts in two to three years’ time.”

Several American and European companies couldn’t ramp up production due to labour shortage, soaring costs and supply chain disruptions to meet the growing demand for arms and ammunition caused by events like the Russian invasion of Ukraine

Besides, countries placed new orders late in the year and the time lag between orders and production meant that the surge in demand was not reflected in these companies’ 2022 revenues, the report states.

Many arms companies faced obstacles in adjusting to production for high-intensity warfare,” said Lucie Béraud-Sudreau, director of SIPRI’s Military Expenditure and Arms Production Programme. 

However, new contracts were signed, notably for ammunition, which could be expected to translate into higher revenue in 2023 and beyond.”

The revenues of 26 European companies increased by a mere 0.9% to reach $121 billion in 2022.

Interestingly, revenues of arms companies in Asia and Oceania and West Asia increased substantially compared to major US and European suppliers.

The revenues of 22 companies from Asia and Oceania increased by 3.1% to reach $134 billion in 2022—the second consecutive year where arms revenues of 100 top companies in Asia and Oceania were higher than those for Europe.

This was especially true in countries where companies maintain responsive ‘ever-warm’ manufacturing capabilities, such as Israel and South Korea, and those where companies tend to rely on short supply chains,” the report reads.

South Korean companies are likely to record increased revenues in coming years due to a surge in booked orders after signing major arms deals with Poland and the UAE.

Domestic demand and reliance on local suppliers shielded Asian arms companies from supply chain disruptions in 2022,” said Xiao Liang, a researcher with the SIPRI Military Expenditure and Arms Production Programme. “Companies in China, India, Japan and Taiwan all benefited from sustained government investment in military modernisation.”

West Asia recorded the largest percentage rise in arms revenue of any region in 2022. The combined revenues of all seven West Asia-based companies increased by 11% to $17.9 billion. Four Turkish companies earned revenues of $5.5 billion, 22% per cent more than in 2021.

Three Israeli companies earned aggregate revenues of $12.4 billion, a 6.5% increase compared with 2021.

Middle Eastern [West Asia] companies that specialise in less technologically sophisticated products were able to scale up production faster in response to surging demand,” said Diego Lopes da Silva, SIPRI senior researcher.

A case in point is Türkiye’s Baykar, producer of the Bayraktar TB-2 drone. Baykar entered the Top 100 for the first time after its arms revenue rose by 94%, the fastest growth rate of any company in the ranking.”  

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