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Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024

Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024

Summary

Regional disturbances such as the interstate power projection strategies of Iran, coupled with the growing threat from terrorist organizations across the region is compelling Saudi Arabia to become one of the largest defense spenders in the world. In 2015, the country briefly managed to displace Russia and emerge as the third largest defense spender, behind only the US and China. The volatility in oil prices forces the government to carefully balance expenditures within anticipated revenues and keep the deficit at a sustainable level.

Saudi Arabia has the one of the largest defense budgets globally which is expected to grow at a forecast CAGR of 6.45%. The 2019 budget aims to allocate sufficient funds to strategic infrastructure projects, as well as maintain infrastructure and continue to push for economic diversification by enhancing the participation of the private sector. The main factors driving defense expenditure in Saudi Arabia are the ongoing arms race among Middle Eastern nations due to growing turbulence in countries such as Syria, Iraq, and Yemen, combined with the perceived threat from Iran.

Saudi Arabian homeland security expenditure is expected to reach US$38.1 billion in 2024. Homeland security is an area that has gained prominence in Saudi Arabia over the last decade, with expenditure expected to increase from US$30.1 billion in 2020 to US$38.1 billion in 2024 at a CAGR of 6.03%. After the Arab Spring revolution in the Middle Eastern and the North African (MENA) region, and minor protests in Riyadh, the country is expected to increase expenditure to enhance security measures. The spread of the extremist group, IS, in neighboring Syria coupled with the Houthi rebellion in adjoining Yemen, has forced Saudi Arabia to invest in securing its borders.

Saud Arabia is the fifth largest global importer of military hardware. Although, the country plans to develop its local defense sector through SAMI under Vision 2030, it is anticipated that the production will be limited to small arms, maintenance, and support services. The US was the leading supplier of arms to Saudi Arabia, occupying a share of 68% with major contracts including the modernization of the Saudi M1A2 Tank fleet and E-3 AWACS, and the supply of UH-60 helicopters. In May 2017, Saudi Arabia's King Abdulaziz City for Science and Technology (KACST) unveiled its Saqr 1 unmanned aerial vehicle, which has a range of 2,500km and features a satellite communication system. The country’s capital expenditure increased from US$8.6 billion in 2015 to US$14.5 billion in 2019, a CAGR of 13.77%, attributed primarily to the drastic erosion in global oil & gas prices worldwide.

The report Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

In particular, it provides an in-depth analysis of the following -

  • The Saudi Arabian defense industry market size and drivers: detailed analysis of the Saudi Arabian defense industry during 2020-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to the army, navy, and air force. It also details the key challenges faced by defense market participants within the country
  • Porter’s Five Force analysis of the Saudi Arabian defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
  • Market opportunities: details of the top five defense investment opportunities over the next 10 years
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the Saudi Arabian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis
Companies mentioned: BAE Systems Plc. , Airbus Group, General Dynamics Corporation, Lockheed Martin, Science Applications International Corporation (SAIC), Sikorsky Aircraft Corporation, Thales SA, Boeing, Northrop Grumman Corporation, Advanced Electronics Company (AEC) and Al Salam Aircraft Company

Scope
  • Saudi Arabia is one of the largest defense spenders in the world, behind the US, China, and Russia, with a military budget valued at US$50.9 billion in 2019. The country is the largest market in the Middle East due to its robust economic and financial position, backed by its oil exports. The rising tension with Iran, aggressive procurement strategies, and modernization programs, along with the need to strengthen its indigenous defense industry, are the main factors boosting the country’s military expenditure.
  • On a cumulative basis, the country is expected to invest US$300.2 billion for defense purposes, of which US$90.8 billion is earmarked for capital expenditure to fund defense procurements. The government’s well-defined military modernization plans along with its efforts to supress Houthi insurgency in Yemen as well as its support for rebel factions within Syria, are expected to stimulate the expenditure over the next few years
  • The MoD is expected to invest in physical security of vital assets, development of land based C4ISR cpaabilities and multi-role aircraft among others.
Reasons to buy
  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Saudi Arabian defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the Saudi Arabian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts.


  • Introduction
    • What is this Report About?
    • Definitions
    • Summary Methodology
    • About Strategic Defence Intelligence
    • Executive Summary
      • Table Figure 1 : Saudi Arabian Defense Imports/Exports: 2014 and 2017
      • Table Figure 2 : Saudi Arabian Defense Budget: 2019 and 2024
  • Market Attractiveness and Emerging Opportunities
    • Table Figure 3 : Saudi Arabia's Top Five Prospective Procurements/Developments
    • Current Market Scenario
      • Primary Threat Perception
        • Table Figure 4: Saudi Arabian National Security Threats
      • Military Doctrine & Strategy
      • Equipment Acquisition
        • Table Saudi Arabian - The Saudi Arabian Land Forces Strength (Including National Guard)
        • Table Saudi Arabian - Saudi Arabian Navy Strength
        • Table Saudi Arabian - Saudi Arabia Air Force Strength
      • Procurement Programs
        • Table Saudi Arabian - Ongoing Development and Procurement Programs
        • Table Saudi Arabian - Future Procurement Programs*
        • Table Top Saudi Arabian Defense Procurement Programs by Value (US$ Million) 2019-2024
      • Social, Political, and Economic Environment & Support for Defense Projects
        • Table Figure 5: Saudi Arabia's Partner Countries for Defense Cooperation and Military Training
        • Table Saudi Arabian Defense Cooperation
        • Table Saudi Arabian Military Training Exercises
    • Defense Market Size Historical and Forecast
      • Saudi Arabian defense budget to grow at an estimated CAGR of 6.45% during 2020-2024
        • Table Saudi Arabian Defense Expenditure (SAR Billion and US$ Billion), 2015-2024
        • Table Figure 6: Saudi Arabian Defense Expenditure (SAR Billion), 2015-2024
        • Table Figure 7: Saudi Arabian Defense Expenditure (US$ Billion), 2015-2024
      • Saudi Arabian defense expenditure as a percentage of GDP is expected to average 6.9% during the forecast period
        • Table Saudi Arabia GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2015-2024
        • Table Figure 8: Saudi Arabian GDP Growth vs. Defense Expenditures Percentage of GDP Growth, 2015-2024
    • Analysis of Defense Budget Allocation
      • Capital expenditure share to increase over the next five years
        • Table Saudi Arabia Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024
        • Table Figure 9:Saudi Arabian Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024
      • Capital expenditure is forecasted to record a CAGR of 8.50% during the forecast period
        • Table Saudi Arabia Defense Capital Expenditure (SAR billion and US$ billion), 2015-2024
        • Table Figure 10: Saudi Arabian Capital Expenditure (in SAR Billion), 2015-2024
        • Table Figure 11: Saudi Arabian Defense Capital Expenditure (US$ Billion), 2015-2024
      • Per capita defense expenditure is expected to increase over the forecast period
        • Table Saudi Arabian Per-Capita Defense Expenditure (US$), 2015-2024
        • Table Figure 12: Saudi Arabian Per Capita Defense Expenditure (US$), 2015-2024
    • Homeland Security Market Size and Forecast
      • The homeland security market in Saudi Arabia is expected to grow at a CAGR of 6.03% during the forecast period
        • Table Saudi Arabian Homeland Security Expenditure (SAR billion & US$ billion), 2015-2024
        • Table Figure 13: Saudi Arabian Homeland Security Expenditure (SAR Billion), 2015-2024
        • Table Figure 14: Saudi Arabian Homeland Security Expenditure (US$ billion), 2015-2024
      • Border Security and Infrastructure, along with cyber security will be the key factors driving homeland security expenditure
    • Benchmarking with Key Global Markets
      • Saudi Arabia is the third largest defense spender
        • Table Benchmarking with Key Markets - 2015-2019 vs. 2020-2024
        • Table Figure 15: Benchmarking with Key Markets - 2015-2019 vs. 2020-2024
      • Saudi Arabia's military expenditure remains among the top five defense spending countries in the world
        • Table Figure 16: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2019 and 2024
      • Saudi Arabia spent 6.4% of its GDP on defense in 2019
        • Table Figure 17: Benchmarking with Large Defense Spenders as % of GDP - 2019
    • Market Opportunities: Key Trends and Drivers
      • Top 10 Defense Market Sectors by Value (US$ Million) - Projections over period 2019-2024
        • Table Top Saudi Arabian Defense Market Sectors by Value (US$ Million) - 2019-2024
      • Critical Infrastructure Protection (CIP) - Physical Security
        • Table Figure 18: Critical Infrastructure Protection Market Size (US$ Billion), 2019-2024
      • Land Based C4ISR
        • Table Figure 19: Land Based C4ISR Market Size (US$ Billion), 2019-2024
      • Fighters & Multi-Role Aircraft
        • Table Figure 20: Fighters & Multi-Role Aircraft Market Size (US$ Billion), 2019-2024
  • Defense Procurement Market Dynamics
    • Table Figure 21: Top Saudi Arabian Defense Procurements in Terms of Their Supplier Relationships
    • Import Market Dynamics
      • Defense industry heavily reliant on imports from foreign countries
        • Table Figure 22: Saudi Arabian Defense Import Trend, 2014-2018 (TIV values)
      • The UK and the US are the key defense suppliers to Saudi Arabia
        • Table Figure 23: Saudi Arabian Defense Imports by Country (%), 2014-2018
      • Aircraft to dominate Saudi Arabian defense imports
        • Table Figure 24: Saudi Arabian Defense Imports by Weapon Category (%), 2014-2018
    • Export Market Dynamics
      • Saudi Arabia's defense export market is negligible
  • Industry Dynamics
    • Five Forces Analysis
      • Table Figure 25: Industry Dynamics - Porter's Five Forces Analysis
    • Bargaining power of supplier: Low to Medium
    • Bargaining power of buyer: Medium
    • Barrier to entry: Medium
    • Intensity of rivalry: Medium to High
    • Threat of substitution: High
  • Market Entry Strategy
    • Market Regulation
    • Defense industry remains closed to FDI
    • Offset Program to aid defense industry and economy
      • Table Saudi Arabia - Offset Guidelines and Agreements
    • Market Entry Route
      • Budgeting Process
        • Table Figure 26: Saudi Arabia Budgeting Process
      • Procurement Policy and Process
        • Table Figure 27: Saudi Arabia - Military Chain of Command
      • A large number of foreign corporations enter the defense market by winning contracts
        • Table Market Entry by Key Foreign Competitors
      • Collaborations and cooperative agreements provide market entry opportunities
      • GCC - an entry route to Saudi Arabian military market
    • Key Challenges
      • Exploitation of power through bribery, corruption, and political affiliations
      • Lack of skilled labor
      • The UK and the US dominate the market, posing challenges to other foreign firms
  • Competitive Landscape and Strategic Insights
    • Competitive Landscape Overview
      • Table Top Defense Suppliers in The Saudi Arabian Defense Industry - By Value (US$ Million) 2019-2024
      • Saudi Arabian defense sector is dominated by foreign competitors
        • Table Competitive Landscape of the Saudi Arabian Defense Industry
      • Saudi Arabia Market Share Analysis, 2019-2024
        • Table Figure 28: Saudi Arabia Market Share Analysis, 2019-2024
      • Domestic participation in the Saudi Arabian defense industry is limited to two companies
    • Key Foreign Companies
      • BAE Systems Plc: overview
      • BAE Systems Plc: products and services
        • Table BAE Systems Plc. - Product Focus
      • BAE Systems Plc: recent announcements and strategic initiatives
      • BAE Systems Plc: alliances
        • Table BAE Systems Plc. - Alliances
      • BAE Systems Plc: recent contract wins
        • Table BAE Systems Plc. - Recent Contract Wins
      • BAE Systems Plc: financial analysis
        • Table Figure 29: BAE Systems - Revenue Trend Analysis (GBP Billion), 2013-2017
        • Table Figure 30: BAE Systems - Operating Profit Trend Analysis (GBP Billion), 2013-2017
        • Table Figure 31: BAE Systems - Net Profit Trend Analysis (GBP billion), 2013-2017
      • Airbus Group: overview
      • Airbus Group: products
        • Table Airbus Group - Product Focus
      • Airbus Group: recent announcement and strategic initiatives
      • Airbus Group: alliances
        • Table Airbus Group- Alliances
      • Airbus Group: recent contract wins
        • Table Airbus Group- Recent Contract Wins
      • Airbus Group: financial analysis
        • Table Figure 32: Airbus Group - Revenue Trend Analysis (EUR Billion), 2013-2017
        • Table Figure 33: Airbus Group - Operating Profit Trend Analysis (EUR Billion), 2013-2017
        • Table Figure 34: Airbus Group - Net Profit Trend Analysis (EUR Billion), 2013-2017
      • General Dynamics Corporation: overview
      • General Dynamics Corporation: products and services
        • Table General Dynamics Corporation - Product Focus
      • General Dynamics Corporation: alliances
        • Table General Dynamics Corporation - Alliances
      • General Dynamics Corporation: recent contract wins
        • Table General Dynamics Corporation - Recent Contract Wins
      • Lockheed Martin: overview
      • Lockheed Martin: products
        • Table Lockheed Martin - Product Focus
      • Lockheed Martin: recent announcements and strategic initiatives
      • Lockheed Martin: alliances
        • Table Lockheed Martin - Alliances
      • Lockheed Martin: recent contract wins
        • Table Lockheed Martin - Recent Contract Wins
      • Lockheed Martin: Financial Analysis
        • Table Figure 35: Lockheed Martin - Revenue Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 36: Lockheed Martin - Operating Profit Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 37: Lockheed Martin - Net Profit Trend Analysis (US$ Billion), 2013-2017
      • Science Applications International Corporation: overview
      • Science Applications International Corporation: products
        • Table Science Application International Corp. (SAIC) - Product Focus
      • Science Application International Corp. (SAIC): recent contracts and strategic initiatives
      • Science Applications International Corporation: alliances
        • Table Science Applications International Corporation - Alliances
      • Science Applications International Corporation: recent contract wins
        • Table Science Applications International Corporation - Recent Contract Wins
      • Sikorsky Aircraft Corporation: overview
      • Sikorsky Aircraft Corporation: products
        • Table Sikorsky Aircraft Corporation - Product Focus
      • Sikorsky Aircraft Corporation: recent announcements and strategic initiatives
      • Sikorsky Aircraft Corporation: alliances
        • Table Sikorsky Aircraft Corporation - Alliances
      • Sikorsky Aircraft Corporation: recent contract wins
        • Table Sikorsky Aircraft Corporation - Recent Contract Wins
      • Thales: overview
      • Thales: products
        • Table Thales - Product Focus
      • Thales: recent announcements and strategic initiatives
      • Thales: alliances
        • Table Thales - Alliances
      • Thales: recent contract wins
        • Table Thales - Recent Contract Wins
      • Thales: Financial Analysis
        • Table Figure 38: Thales - Revenue Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 39: Thales - Operating Profit Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 40: Thales- Net Profit Trend Analysis (US$ Billion), 2013-2017
      • Boeing: overview
      • Boeing: products and services
        • Table Boeing - Product Focus
      • Boeing: recent announcements and strategic initiatives
      • Boeing: alliances
        • Table Boeing - Alliances
      • Boeing: recent contract wins
        • Table Boeing - Recent Contract Wins
      • Boeing: Financial Analysis
        • Table Figure 41: Boeing - Revenue Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 42: Boeing - Operating Profit Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 43: Boeing - Net Profit Trend Analysis (US$ Billion), 2013-2017
      • Northrop Grumman Corporation: overview
      • Northrop Grumman Corporation: products
        • Table Northrop Grumman - Product Focus
      • Northrop Grumman Corporation: recent announcements and strategic initiatives
      • Northrop Grumman Corporation: alliances
        • Table Northrop Grumman Corporation - Alliances
      • Northrop Grumman Corporation: recent contract wins
        • Table Northrop Grumman Corporation - Recent Contract Wins
      • Northrop Grumman: Financial Analysis
        • Table Figure 44: Northrop Grumman - Revenue Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 45: Northrop Grumman - Operating Profit Trend Analysis (US$ Billion), 2013-2017
        • Table Figure 46: Northrop Grumman - Net Profit Trend Analysis (US$ Billion), 2013-2017
    • Key Domestic Companies
      • Advanced Electronics Company: overview
      • Advanced Electronics Company: services
        • Table Advanced Electronics Company - Product Focus
      • Advanced Electronics Company: recent announcements and strategic initiatives
      • Advanced Electronics Company: alliances
        • Table Advanced Electronics Company - Alliances
      • Advanced Electronics Company: recent contract wins
        • Table Advanced Electronics Company - Recent Contract Wins
      • Al Salam Aircraft Company: overview
      • Al Salam Aircraft Company: products and services
        • Table Al Salam Aircraft Company - product focus
      • Al Salam Aircraft Company: alliances
        • Table Al Salam Aircraft Company - Alliances
      • Al Salam Aircraft Company: recent contract wins
        • Table Al Salam Aircraft Company - Recent Contract Wins
  • Business Environment and Country Risk
    • Economic Performance
      • GDP per Capita
        • Table Figure 47: Saudi Arabian GDP per Capita (US$), 2015-2025
      • Gross Domestic Product
        • Table Figure 48: Saudi Arabian GDP (current US$ bn), 2015-2025
      • Exports of goods and services LCU Bn
        • Table Figure 49: Saudi Arabian Exports of goods and services (current LCU Bn), 2005-2014
      • Imports of goods and services, LCU Bn
        • Table Figure 50: Saudi Arabian Imports of goods and services (current LCU Bn), 2005-2014
      • Gross National Disposable Income
        • Table Figure 51: Saudi Arabian Gross National disposable income (US$ Bn), 2005-2014
      • Market Capitalization of listed companies (US$ Billion)
        • Table Figure 52: Saudi Arabian Market Capitalization of listed companies (US$ Billion), 2005-2012
      • Market Capitalization of listed companies (as a % of GDP)
        • Table Figure 53: Saudi Arabian Market Capitalization of listed companies (as a % of GDP), 2005-2012
      • Goods Exports as a % of GDP
        • Table Figure 54: Saudi Arabian Goods exports as a % of GDP, 2005-2014
      • Goods Imports as a % of GDP
        • Table Figure 55: Saudi Arabian Goods Imports as a % of GDP, 2005-2014
      • Services Imports as a % of GDP
        • Table Figure 56: Saudi Arabian Services Imports as a % of GDP, 2005-2014
      • Services Exports as a % of GDP
        • Table Figure 57: Saudi Services Exports as a % of GDP, 2005-2014
      • Net Foreign Direct Investment (current US$ Bn)
        • Table Figure 58: Saudi Arabian net Foreign Direct Investment (current US$ Bn), 2005-2014
      • Net FDI as a % of GDP
        • Table Figure 59: Saudi Arabian Net FDI as a % of GDP, 2005-2014
      • Mining, Manufacturing, Utilities Output (LCU Bn)
        • Table Figure 60: Saudi Arabian Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014
  • Appendix
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