Cover Image
Market Research Report

Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Published by GlobalData Product code 654972
Published Content info 142 Pages
Delivery time: 1-2 business days
Price
Back to Top
Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023
Published: June 12, 2018 Content info: 142 Pages
Description

Summary

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$56 billion in 2018. 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.

Saudi Arabia was forced to cut back on defense spending in order to rationalize public expenditure and during 2015 the country's defense spending declined by -29.6%. Although the country was expected to cut back on defense expenditure for 2016 and 2017, there were no cuts in spending, and during 2016 and 2017 Saudi defense and security expenditure cumulatively amounted to US$81.6 billion.

On the same time, Homeland security is an area that has gained prominence in Saudi Arabia over the last decade, with expenditure expected to increase 8 to US$41.7 billion in 2023 at a CAGR of 8.47%. 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, ISIS, in neighboring Syria coupled with the Houthi rebellion in adjoining Yemen, has forced Saudi Arabia to invest in securing its borders. As such, Saudi Arabia is investing in high technology border fencing along its boundaries with Iraq and Yemen.

As Saudi Arabia plans to source as much as 50% of its defense equipment from domestic defense companies in future and, in May 2017, the Saudi Arabian Public Investment Fund (PIF) decided to create a national defense industry company - Saudi Arabian Military Industries (SAMI) to cater to its domestic defense requirements. Many major defense companies, such as BAE Systems, EADS, General Dynamics, Thales, SAIC, and Northrop Grumman, have entered the Saudi Arabian defense market by forming alliances and joint ventures with domestic companies.

"Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023", 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.

Key Inclusions of the report are -

Market opportunity and attractiveness: detailed analysis of the current industry size and growth expectations during 2019-2023, including highlights of the key growth stimulators

Procurement dynamics: trend analysis of imports and exports, together with their implications and impact on the Vietnamese defense industry

Industry structure: five forces analysis to identify various power centers in the industry and how these are expected to develop in the future

Market entry strategy: analysis of possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives

Competitive landscape and strategic insights: analysis of the competitive landscape of the defense industry in Vietnam.

Business environment and country risk: a range of drivers at country level, assessing business environment and country risk.

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$56 billion in 2018. 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$326.5 billion for defense purposes, of which US$146 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

Table of Contents
Product Code: DF0502MR

Table of Contents

1. Introduction 9

  • 1.1. What is this Report About? 9
  • 1.2. Definitions 9
  • 1.3. Summary Methodology 11
  • 1.4. About Strategic Defence Intelligence 12

2. Executive Summary 13

3. Market Attractiveness and Emerging Opportunities 16

  • 3.1. Current Market Scenario 17
    • 3.1.1. Primary Threat Perception 17
    • 3.1.2. Military Doctrine & Strategy 19
    • 3.1.3. Military Fleet Size 21
    • 3.1.4. Procurement Programs 26
    • 3.1.5. Ongoing procurement programs 26
    • 3.1.6. Future procurement programs 27
    • 3.1.7. Top Procurement Programs by Value (US$ Million) 2018-2023 29
    • 3.1.8. Social, Political, and Economic Environment & Support for Defense Projects 30
    • 3.1.9. Political & Strategic Alliances 31
  • 3.2. Defense Market Size Historical and Forecast 32
    • 3.2.1. Saudi Arabian defense budget to grow at an estimated CAGR of 4.03% during 2019-2023 32
    • 3.2.2. Strained relationship with Iran, military modernization programs, and the need to develop its indigenous defense sector are key factors driving defense expenditure 35
    • 3.2.3. Saudi Arabian defense expenditure as a percentage of GDP is expected to average 8.1% during the forecast period 37
  • 3.3. Analysis of Defense Budget Allocation 39
    • 3.3.1. Majority of the budget to be allocated for revenue expenditure 39
    • 3.3.2. Capital expenditure is anticipated to record a CAGR of 3.84% during the forecast period 41
    • 3.3.3. Per capita defense expenditure is expected to increase over the forecast period 43
  • 3.4. Homeland Security Market Size and Forecast 45
    • 3.4.1. The homeland security market in Saudi Arabia is expected to grow at a CAGR of 5.65% during the forecast period 45
    • 3.4.2. Border Security and Infrastructure, along with cyber security will be the key factors driving homeland security 48
    • 3.4.3. Saudi Arabia considered at 'moderate risk' of terrorist attack 49
    • 3.4.4. Saudi Arabia faces high level of threat from foreign terrorist organizations 50
    • 3.4.5. Saudi Arabia has a terrorism index score of 5.8 52
  • 3.5. Benchmarking with Key Global Markets 53
    • 3.5.1. Saudi Arabia is the third largest defense spender 53
    • 3.5.2. Saudi Arabia is expected to remain among the top five defense spending countries in the world 55
    • 3.5.3. Saudi Arabia spent over 7.5% of its GDP on defense in 2018 56
  • 3.6. Market Opportunities: Key Trends and Drivers 57
    • 3.6.1. Top 10 Defense Market Sectors by Value (US$ Million) - Projections over period 2018-2023 57
    • 3.6.2. Critical Infrastructure Protection (CIP) - Physical Security 58
    • 3.6.3. Land Based C4ISR 59
    • 3.6.4. Fighters & Multi-Role Aircraft 60

4. Defense Procurement Market Dynamics 62

  • 4.1. Import Market Dynamics 63
    • 4.1.1. Defense industry heavily reliant on imports from foreign countries 63
    • 4.1.2. The UK and the US are the key defense suppliers to Saudi Arabia 64
    • 4.1.3. Aircraft to dominate Saudi Arabian defense imports 66
  • 4.2. Export Market Dynamics 68
    • 4.2.1. Saudi Arabia's defense export market is negligible 68

5. Industry Dynamics 69

  • 5.1. Five Forces Analysis 69
  • 5.2. Bargaining power of supplier: Low to Medium 70
  • 5.3. Bargaining power of buyer: Medium 70
  • 5.4. Barrier to entry: Medium 70
  • 5.5. Intensity of rivalry: Medium to High 70
  • 5.6. Threat of substitution: High 71

6. Market Entry Strategy 72

  • 6.1. Market Regulation 72
  • 6.2. Defense industry remains closed to FDI 72
  • 6.3. Offset Program to aid defense industry and economy 72
  • 6.4. Market Entry Route 74
    • 6.4.1. Budgeting Process 74
    • 6.4.2. Procurement Policy and Process 75
    • 6.4.3. A large number of foreign corporations enter the defense market by winning contracts 76
    • 6.4.4. Collaborations and cooperative agreements provide market entry opportunities 76
    • 6.4.5. GCC - an entry route to Saudi Arabian military market 77
  • 6.5. Key Challenges 78
    • 6.5.1. Bribery, corruption, and political affiliations 78
    • 6.5.2. Scarcity of skilled Labor and Nitaqat law 78

7. Competitive Landscape and Strategic Insights 79

  • 7.1. Competitive Landscape Overview 79
    • 7.1.1. Saudi Arabian defense sector is dominated by foreign competitors 80
    • 7.1.2. Domestic participation in the Saudi Arabian defense industry is limited to two companies 81
  • 7.2. Key Foreign Companies 82
    • 7.2.1. BAE Systems Plc: overview 82
    • 7.2.2. BAE Systems Plc: products and services 82
    • 7.2.3. BAE Systems Plc: recent announcements and strategic initiatives 83
    • 7.2.4. BAE Systems Plc: alliances 85
    • 7.2.5. BAE Systems Plc: recent contract wins 86
    • 7.2.6. BAE Systems Plc: financial analysis 87
    • 7.2.7. Airbus Group: overview 89
    • 7.2.8. Airbus Group: products 89
    • 7.2.9. Airbus Group: recent announcement and strategic initiatives 89
    • 7.2.10. Airbus Group: alliances 90
    • 7.2.11. Airbus Group: recent contract wins 91
    • 7.2.12. Airbus Group: financial analysis 92
    • 7.2.13. General Dynamics Corporation: overview 94
    • 7.2.14. General Dynamics Corporation: products and services 94
    • 7.2.15. General Dynamics Corporation: alliances 96
    • 7.2.16. General Dynamics Corporation: recent contract wins 96
    • 7.2.17. Lockheed Martin: overview 99
    • 7.2.18. Lockheed Martin: products 99
    • 7.2.19. Lockheed Martin: recent announcements and strategic initiatives 99
    • 7.2.20. Lockheed Martin: alliances 101
    • 7.2.21. Lockheed Martin: recent contract wins 102
    • 7.2.22. Lockheed Martin: Financial Analysis 103
    • 7.2.23. Science Applications International Corporation: overview 105
    • 7.2.24. Science Applications International Corporation: products 105
    • 7.2.25. Science Application International Corp. (SAIC): recent contracts and strategic initiatives 105
    • 7.2.26. Science Applications International Corporation: alliances 106
    • 7.2.27. Science Applications International Corporation: recent contract wins 106
    • 7.2.28. Sikorsky Aircraft Corporation: overview 107
    • 7.2.29. Sikorsky Aircraft Corporation: products 107
    • 7.2.30. Sikorsky Aircraft Corporation: recent announcements and strategic initiatives 107
    • 7.2.31. Sikorsky Aircraft Corporation: alliances 108
    • 7.2.32. Sikorsky Aircraft Corporation: recent contract wins 109
    • 7.2.33. Thales: overview 110
    • 7.2.34. Thales: products 110
    • 7.2.35. Thales: recent announcements and strategic initiatives 110
    • 7.2.36. Thales: alliances 111
    • 7.2.37. Thales: recent contract wins 112
    • 7.2.38. Thales: Financial Analysis 112
    • 7.2.39. Boeing: overview 114
    • 7.2.40. Boeing: products and services 114
    • 7.2.41. Boeing: recent announcements and strategic initiatives 114
    • 7.2.42. Boeing: alliances 115
    • 7.2.43. Boeing: recent contract wins 116
    • 7.2.44. Boeing: Financial Analysis 117
    • 7.2.45. Northrop Grumman Corporation: overview 119
    • 7.2.46. Northrop Grumman Corporation: products 119
    • 7.2.47. Northrop Grumman Corporation: recent announcements and strategic initiatives 119
    • 7.2.48. Northrop Grumman Corporation: alliances 121
    • 7.2.49. Northrop Grumman Corporation: recent contract wins 122
    • 7.2.50. Northrop Grumman: Financial Analysis 122
  • 7.3. Key Domestic Companies 124
    • 7.3.1. Advanced Electronics Company: overview 124
    • 7.3.2. Advanced Electronics Company: services 124
    • 7.3.3. Advanced Electronics Company: recent announcements and strategic initiatives 124
    • 7.3.4. Advanced Electronics Company: alliances 125
    • 7.3.5. Advanced Electronics Company: recent contract wins 125
    • 7.3.6. Al Salam Aircraft Company: overview 126
    • 7.3.7. Al Salam Aircraft Company: products and services 126
    • 7.3.8. Al Salam Aircraft Company: alliances 126
    • 7.3.9. Al Salam Aircraft Company: recent contract wins 127

8. Business Environment and Country Risk 128

  • 8.1. Economic Performance 128
    • 8.1.1. GDP per Capita 128
    • 8.1.2. Gross Domestic Product 129
    • 8.1.3. Exports of goods and services LCU Bn 130
    • 8.1.4. Imports of goods and services, LCU Bn 131
    • 8.1.5. Gross National Disposable Income 132
    • 8.1.6. Market Capitalization of listed companies (US$ Billion) 133
    • 8.1.7. Market Capitalization of listed companies (as a % of GDP) 134
    • 8.1.8. Goods Exports as a % of GDP 135
    • 8.1.9. Goods Imports as a % of GDP 136
    • 8.1.10. Services Imports as a % of GDP 137
    • 8.1.11. Services Exports as a % of GDP 138
    • 8.1.12. Net Foreign Direct Investment (current US$ Bn) 139
    • 8.1.13. Net FDI as a % of GDP 140
    • 8.1.14. Mining, Manufacturing, Utilities Output (LCU Bn) 141

9. Appendix 142

  • 9.1. About SDI 142
  • 9.2. Disclaimer 142

List of Tables

  • Table 1: The Saudi Arabian Land Forces Strength (Including National Guard) 21
  • Table 2: Saudi Arabian Navy Strength 23
  • Table 3: Saudi Arabia Air Force Strength 24
  • Table 4: Saudi Arabian - Ongoing Development and Procurement Programs 26
  • Table 5: Saudi Arabian - Future Procurement Programs* 27
  • Table 6: Top Saudi Arabian Defense Procurement Programs by Value (US$ Million) 2018-2023 29
  • Table 7: Saudi Arabian Defense Expenditure (SAR Billion and US$ Billion), 2014-2023 33
  • Table 8: Saudi Arabia GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2014-2023 37
  • Table 9: Saudi Arabia Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 39
  • Table 10: Saudi Arabia Defense Capital Expenditure (SAR billion and US$ billion), 2014-2023 41
  • Table 11: Saudi Arabian Per-Capita Defense Expenditure (US$), 2014-2023 43
  • Table 12: Saudi Arabian Homeland Security Expenditure (SAR billion & US$ billion), 2014-2023 46
  • Table 13: Terrorism Index, 2018 50
  • Table 14: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 53
  • Table 15: Top Saudi Arabian Defense Market Sectors by Value (US$ Million) - 2018-2023 57
  • Table 16: Saudi Arabia - Offset Guidelines and Agreements 73
  • Table 17: Saudi Arabian Budget Formation Timetable 74
  • Table 18: Market Entry by Key Foreign Competitors 76
  • Table 19: Top Defense Suppliers in The Saudi Arabian Defense Industry - By Value (US$ Million) 2018-2023 79
  • Table 20: Competitive Landscape of the Saudi Arabian Defense Industry 80
  • Table 21: BAE Systems Plc. - Product Focus 82
  • Table 22: BAE Systems Plc. - Alliances 85
  • Table 23: BAE Systems Plc. - Recent Contract Wins 86
  • Table 24: Airbus Group - Product Focus 89
  • Table 25: Airbus Group- Alliances 90
  • Table 26:Airbus Group- Recent Contract Wins 91
  • Table 27: General Dynamics Corporation - Product Focus 94
  • Table 28: General Dynamics Corporation - Alliances 96
  • Table 29: General Dynamics Corporation - Recent Contract Wins 96
  • Table 30: Lockheed Martin - Product Focus 99
  • Table 31: Lockheed Martin - Alliances 101
  • Table 32: Lockheed Martin - Recent Contract Wins 102
  • Table 33: Science Application International Corp. (SAIC) - Product Focus 105
  • Table 34: Science Applications International Corporation - Alliances 106
  • Table 35: Science Applications International Corporation - Recent Contract Wins 106
  • Table 36: Sikorsky Aircraft Corporation - Product Focus 107
  • Table 37: Sikorsky Aircraft Corporation - Alliances 108
  • Table 38: Sikorsky Aircraft Corporation - Recent Contract Wins 109
  • Table 39: Thales - Product Focus 110
  • Table 40: Thales - Alliances 111
  • Table 41: Thales - Recent Contract Wins 112
  • Table 42: Boeing - Product Focus 114
  • Table 43: Boeing - Alliances 115
  • Table 44: Boeing - Recent Contract Wins 116
  • Table 45: Northrop Grumman - Product Focus 119
  • Table 46: Northrop Grumman Corporation - Alliances 121
  • Table 47: Northrop Grumman Corporation - Recent Contract Wins 122
  • Table 48: Advanced Electronics Company - Product Focus 124
  • Table 49: Advanced Electronics Company - Alliances 125
  • Table 50: Advanced Electronics Company - Recent Contract Wins 125
  • Table 51: Al Salam Aircraft Company - product focus 126
  • Table 52: Al Salam Aircraft Company - Alliances 126
  • Table 53: Al Salam Aircraft Company - Recent Contract Wins 127

List of Figures

  • Figure 1: Saudi Arabian Defense Expenditure (SAR Billion), 2014-2023 33
  • Figure 2: Saudi Arabian Defense Expenditure (US$ Billion), 2014-2023 34
  • Figure 3: Saudi Arabian GDP Growth vs. Defense Expenditures Percentage of GDP Growth, 2014-2023 38
  • Figure 4:Saudi Arabian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 40
  • Figure 5: Saudi Arabian Capital Expenditure (in SAR Billion), 2014-2023 42
  • Figure 6: Saudi Arabian Defense Capital Expenditure (US$ Billion), 2014-2023 42
  • Figure 7: Saudi Arabian Per Capita Defense Expenditure (US$), 2014-2023 44
  • Figure 8: Saudi Arabian Homeland Security Expenditure (SAR Billion), 2014-2023 46
  • Figure 9: Saudi Arabian Homeland Security Expenditure (US$ billion), 2014-2023 47
  • Figure 10: Terrorism Heat Map, 2018 49
  • Figure 11: Terrorism Index, 2018 52
  • Figure 12: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 54
  • Figure 13: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2018 and 2023 55
  • Figure 14: Benchmarking with Large Defense Spenders as % of GDP - 2018 56
  • Figure 15: Critical Infrastructure Protection Market Size (US$ Million), 2018-2023 58
  • Figure 16: Land Based C4ISR Market Size (US$ Million), 2018-2023 59
  • Figure 17: Fighters & Multi-Role Aircraft Market Size (US$ Million), 2013-2023 61
  • Figure 18: Top Saudi Arabian Defense Procurements in Terms of Their Supplier Relationships 62
  • Figure 19: Saudi Arabian Defense Import Trend, 2013-2017 (TIV values) 63
  • Figure 20: Saudi Arabian Defense Imports by Country (%), 2013-2017 65
  • Figure 21: Saudi Arabian Defense Imports by Weapon Category (%), 2013-2017 67
  • Figure 22: Industry Dynamics - Porter's Five Forces Analysis 69
  • Figure 23: Saudi Arabia - Military Chain of Command 75
  • Figure 24: BAE Systems - Revenue Trend Analysis (GBP Billion), 2013-2017 87
  • Figure 25: BAE Systems - Operating Profit Trend Analysis (GBP Billion), 2013-2017 87
  • Figure 26: BAE Systems - Net Profit Trend Analysis (GBP billion), 2013-2017 88
  • Figure 27: Airbus Group - Revenue Trend Analysis (EUR Billion), 2013-2017 92
  • Figure 28: Airbus Group - Operating Profit Trend Analysis (EUR Billion), 2013-2017 92
  • Figure 29: Airbus Group - Net Profit Trend Analysis (EUR Billion), 2013-2017 93
  • Figure 30: Lockheed Martin - Revenue Trend Analysis (US$ Billion), 2013-2017 103
  • Figure 31: Lockheed Martin - Operating Profit Trend Analysis (US$ Billion), 2013-2017 104
  • Figure 32: Lockheed Martin - Net Profit Trend Analysis (US$ Billion), 2013-2017 104
  • Figure 33: Thales - Revenue Trend Analysis (US$ Billion), 2013-2017 112
  • Figure 34: Thales - Operating Profit Trend Analysis (US$ Billion), 2013-2017 113
  • Figure 35: Thales- Net Profit Trend Analysis (US$ Billion), 2013-2017 113
  • Figure 36: Boeing - Revenue Trend Analysis (US$ Billion), 2013-2017 117
  • Figure 37: Boeing - Operating Profit Trend Analysis (US$ Billion), 2013-2017 118
  • Figure 38: Boeing - Net Profit Trend Analysis (US$ Billion), 2013-2017 118
  • Figure 39: Northrop Grumman - Revenue Trend Analysis (US$ Billion), 2013-2017 122
  • Figure 40: Northrop Grumman - Operating Profit Trend Analysis (US$ Billion), 2013-2017 123
  • Figure 41: Northrop Grumman - Net Profit Trend Analysis (US$ Billion), 2013-2017 123
  • Figure 42: Saudi Arabian GDP per Capita (US$), 2015-2025 128
  • Figure 43: Saudi Arabian GDP (current US$ bn), 2015-2025 129
  • Figure 44: Saudi Arabian Exports of goods and services (current LCU Bn), 2005-2014 130
  • Figure 45: Saudi Arabian Imports of goods and services (current LCU Bn), 2005-2014 131
  • Figure 46: Saudi Arabian Gross National disposable income (US$ Bn), 2005-2014 132
  • Figure 47: Saudi Arabian Market Capitalization of listed companies (US$ Billion), 2005-2012 133
  • Figure 48: Saudi Arabian Market Capitalization of listed companies (as a % of GDP), 2005-2012 134
  • Figure 49: Saudi Arabian Goods exports as a % of GDP, 2005-2014 135
  • Figure 50: Saudi Arabian Goods Imports as a % of GDP, 2005-2014 136
  • Figure 51: Saudi Arabian Services Imports as a % of GDP, 2005-2014 137
  • Figure 52: Saudi Services Exports as a % of GDP, 2005-2014 138
  • Figure 53: Saudi Arabian net Foreign Direct Investment (current US$ Bn), 2005-2014 139
  • Figure 54: Saudi Arabian Net FDI as a % of GDP, 2005-2014 140
  • Figure 55: Saudi Arabian Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014 141
Back to Top