For both economic and political reasons, Saudi Arabia has increasingly moved toward manufacturing certain military equipment domestically rather than relying entirely on imports. Although the Kingdom has made notable progress in recent years, this progress still falls short of the ambitions outlined in Vision 2030.
Military manufacturing contributes to higher added value, thereby boosting economic growth rates. It also helps diversify the sources of GDP—one of the central objectives of economic policy across all Gulf states.
In Saudi Arabia, military production has strengthened the manufacturing sector in both scale and relative importance. The sector expanded from USD 72 billion in 2012, representing 9.7% of GDP, to USD 160 billion in 2022, equivalent to 14.4% of GDP.
Whether civilian or military, industrial development also enables the utilization of local raw materials. For example, the Qassim region contains significant reserves of bauxite at the Al-Ba’itha mine, which is used in the production of aluminum essential to both civilian and military industries. In addition, the defense industry creates specialized national expertise and generates employment opportunities, helping reduce Saudi unemployment, which stood at 7.6% in 2024.
Saudi Arabia is the world’s second-largest arms importer after India, accounting for approximately 8.4% of global military equipment imports—a remarkably high share by any standard.
Riyadh has also sought to acquire the most advanced weapons systems, resulting in massive expenditures. Saudi Arabia has become one of the leading importers of American, French, British, Spanish, and Canadian weapons. Between 2019 and 2023, Saudi Arabia accounted for 14% of U.S. arms exports, while its share of Canadian arms exports reached 37%.
Compared with imports, domestic manufacturing reduces the cost of military equipment, thereby helping contain overall military spending and easing the chronic budget deficit. Military expenditures have not declined—in fact, they have risen—but local production has prevented them from increasing even further.
The importance of military industry extends beyond economics into politics from at least two perspectives.
The first is regional instability. Over the past several years, the Middle East has witnessed escalating tensions, particularly as Iran has emerged as a major military power ranked 14th globally, possessing advanced missile capabilities and nuclear potential. Tehran also exercises significant influence over Iraq, Syria, Lebanon, and Yemen, including in military affairs.
The second concern is the possibility of U.S. or European sanctions that could weaken Saudi Arabia’s defense capabilities, as occurred in 2018.
Military industrialization therefore serves as a strategic response to these political challenges and contributes to strengthening Riyadh’s international standing.
According to the Global Firepower Index, the Saudi military is the second strongest in the Arab world after Egypt and ranks 23rd globally in overall military capability.
This ranking is based on eight indicators: manpower, air power, naval power, land forces, financial resources, logistics, natural resources, and geography. Each indicator includes multiple subcategories.
Saudi Arabia possesses 57 military vessels, ranking 50th worldwide, as well as 1,485 tanks, placing it 17th globally. It also operates 914 military aircraft, ranking 12th in the world. Saudi military expenditures amount to USD 75.8 billion annually, making the Kingdom the fifth-largest military spender globally.
Riyadh seeks to strengthen its military position in the region through several methods, foremost among them industrial partnerships with foreign companies. Examples include:
- In February 2024, Saudi Arabia signed a contract with the American defense giant Lockheed Martin to manufacture components of the THAAD air defense missile system.
- An agreement with the French company Figeac Aero at the end of 2021 to produce aircraft structures.
- A contract with Turkey’s Baykar in August 2023 concerning drone manufacturing.
- A December 2019 agreement with Raytheon related to the Patriot missile defense system, alongside additional agreements on surface-to-air missile systems.
- Several partnerships with Britain’s BAE Systems, which has worked with Saudi Arabia for six decades in aircraft, naval systems, radar technologies, and related fields.
Three Government Entities
Three state bodies oversee Saudi Arabia’s military industry.
General Authority for Military Industries (GAMI)
Established in 2017, GAMI is responsible for regulating and developing the defense sector. It formulates industrial policy, oversees military procurement, supports defense research, issues manufacturing licenses, and manages partnerships with domestic and international entities. It also represents the Kingdom in international defense forums and organizes military exhibitions.
General Corporation for Military Industries
Founded in 1985, the corporation was created to meet the armed forces’ needs for weapons, ammunition, and spare parts. It operates several factories, including the Armored Vehicles and Heavy Equipment Factory, which produces vehicles such as Al-Dahna, Al-Shibl 1, Al-Shibl 2, and Tuwaiq 2.
Saudi Arabian Military Industries (SAMI)
Founded in 2017 and wholly owned by the Public Investment Fund, SAMI supervises several subsidiaries specializing in various military systems. Its activities cover five sectors:
- Aerospace Systems – maintenance and repair of aircraft engines and avionics, as well as drone manufacturing and aircraft structures.
- Land Systems – production and maintenance of armored vehicles and artillery systems.
- Defense Systems – missile-related technologies and systems.
- Naval Systems – port security and maintenance of naval vessels.
- Electronics Systems – cybersecurity design and radar maintenance.
SAMI’s Ambition
SAMI aims to achieve Saudi self-sufficiency in these strategic sectors while positioning itself among the world’s top 25 defense companies by 2030.
Can the company realistically achieve this goal?
Defense News annually publishes a ranking of the world’s top 100 military companies based on their importance. The 2024 list includes 48 American companies, five from China, five from Germany, and four each from Britain and France. Most of the remaining firms belong to technologically advanced industrial powers.
In 2021, SAMI entered the top 100 for the first time, ranking 98th. It then advanced rapidly to 79th place in 2022 and 75th in 2023.
The ranking system is based solely on total defense revenue—that is, military sales. SAMI’s revenues increased from USD 605 million in 2021 to USD 901 million in 2022 and USD 1.137 billion in 2023, enabling its rapid rise in the rankings.
However, while all the listed companies operate in defense industries, the ranking measures commercial performance only. It does not assess industrial added value or technological sophistication. Consequently, reaching the top 25 by 2030—if achieved—would not necessarily indicate genuine industrial advancement.
It is worth noting that Kuwait’s Agility ranked 37th globally in 2008 despite Kuwait’s weak industrial base, while the UAE’s EDGE ranked 24th in 2021 before both companies later disappeared from the rankings. Today, SAMI remains the only Arab company included in this international classification.
Localization and Vision 2030
Saudi Vision 2030 states that “our goal is to localize over 50% of military spending by 2030.” This phrase has often been repeated without careful scrutiny.
The wording “military spending” is misleading because military expenditure includes salaries, administrative costs, and procurement of military equipment. Localization, however, applies only to the manufacturing of weapons and military systems domestically instead of importing them.
The central question is whether such a target is realistically achievable by 2030.
According to the General Authority for Military Industries, localization stood at only 2% in 2015, one year before Vision 2030 was launched. By 2022—six years later—the figure had risen to 13.7%.
This means the average annual increase was approximately 1.9 percentage points:
(13.7% – 2%) ÷ 6 years.
Assuming this pace continues, localization would reach only 28.9% by 2030:
(1.9% × 8 years) + 13.7%.
In other words, Vision 2030 is unlikely to achieve its stated target. Based on these calculations, surpassing 50% localization would require approximately twenty years from 2022—not eight—meaning the target would only be reached around 2042 rather than 2030.
Three main factors explain the difficulty of achieving the goal:
The first is that advanced defense manufacturing remains relatively new in Saudi Arabia, particularly when it comes to sophisticated technologies and complex systems.
The second is the limited effectiveness of agreements concluded with foreign defense firms.
The third is that these companies are unwilling to transfer intellectual property rights and advanced technologies, not only for financial reasons but also for political considerations.
Saudi Arabia has undoubtedly made progress across various industrial sectors. Yet the military ambitions of Vision 2030 will not be fulfilled unless the Kingdom succeeds not only in importing technology through partnerships with foreign firms, but also in generating technology independently through its own domestic capabilities.
