According to a report by the Stockholm International Peace Research Institute (SIPRI), the global arms industry recorded a sharp revenue increase in 2023, with sales climbing to $632 billion, marking a 4.2% rise compared to the previous year.
The rise was fueled by ongoing conflicts, such as the wars in Ukraine and Gaza, along with escalating tensions in Asia, which drove up demand for weapons in various parts of the world.
The world’s top 100 arms manufacturing companies tracked by SIPRI achieved annual sales exceeding $1 billion for the first time. The data reveals the increasing global appetite for military hardware.
Arms revenues grew across all geographic regions tracked by a Stockholm-based institute. Russia and the Middle East recorded the largest growth, with revenues rising by 40% and 18%, respectively.
Companies in Asia and Oceania saw a 5.7% rise, while North America and Europe experienced more modest gains of 2.4% and 0.2%, respectively.
Lorenzo Scarazzato, a researcher with the SIPRI Military Expenditure and Arms Production, said, “There was a marked rise in arms revenues in 2023, and this is likely to continue in 2024.”
The report highlighted that global arms sales had dipped in 2022 as manufacturers struggled to meet surging demand. However, in 2023, many companies ramped up production, launched recruitment drives, and expanded supply chains to accommodate the market’s needs.
The wars in Ukraine and Gaza, alongside increasing geopolitical tensions in East Asia, have spurred major spending on military hardware. Rearmament programs in other regions have also contributed to the industry’s growth.
SIPRI noted that smaller arms manufacturers have proven more agile in adapting to this demand, particularly those focused on niche components or systems requiring specialized supply chains.
Nan Tian, Director of SIPRI’s Military Expenditure and Arms Production Program, explained, “A lot of them specialize in either a component of something or build systems that require one set of supply chains, allowing them to react more quickly.”
Looking ahead, experts predict the upward trend in arms sales will persist. “The rise in arms revenues in 2023 is likely to continue in 2024,” Scarazzato concluded, pointing to the ongoing recruitment drives and strategic investments by leading manufacturers.
US Companies Dominate Global Arms Market
The United States continues to hold a commanding position in the global arms industry, with 41 companies featured in SIPRI’s Top 100 rankings.
These US-based firms collectively saw a 2.5% increase in arms revenues, reaching $317 billion in 2023. Together, they accounted for half of the total revenue from the Top 100 arms manufacturers.
Of these American companies, 30 reported year-on-year revenue growth. The top five arms companies in the ranking were all based in the US, and their combined revenues made up 31% of the total arms sales from the Top 100.
While these firms generally saw nominal revenue increases, only three—Northrop Grumman (+5.8%), Boeing (+2.0%), and General Dynamics (+3.2%)—recorded growth in real terms.
However, the two largest arms producers, Lockheed Martin and RTX, faced challenges despite the higher global demand for military equipment. Both companies reported slight decreases in real-term revenues, with Lockheed Martin down 1.6% and RTX dropping 1.3%.
These declines were attributed to ongoing supply chain disruptions, particularly in the aeronautical and missile defense sectors.
The report pointed out that a critical shortage of solid-fuel rocket motors, a key missile component produced by a limited number of suppliers, severely impacted their production capabilities throughout 2023.
In contrast, Northrop Grumman, the third-largest arms producer in the world, appeared to be less affected by supply chain difficulties. The company saw its arms revenues rise by 5.8%, reaching $35.6 billion in 2023.
This growth was spurred by the escalating need for ammunition, particularly for Ukraine, along with the US military’s focus on upgrading missile defense systems and modernizing its nuclear arsenal.
Northrop Grumman’s Space Systems division was particularly strong, recording a 9.2% revenue increase, the largest of any segment.
Even after these challenges, US arms companies remain the dominant players in the global arms market, benefiting from strong demand and government priorities on military strength, even as some contend with logistical hurdles.
Russian Arms Revenues Surge
Russian arms manufacturers experienced a dramatic 40% increase in combined revenues in 2023 and reached an estimated $25.5 billion, according to SIPRI’s latest report.
This surge was largely fueled by Rostec, a state-owned conglomerate overseeing numerous arms producers. Rostec’s arms revenues soared by 49%, which accounts for most of the growth. However, individual revenue data for seven of its previously listed subsidiaries remains unavailable.
“Official data on Russian arms production is scarce and questionable but most analysts believe that the production of new military equipment increased substantially in 2023,” noted Dr. Nan Tian of SIPRI. “Russia’s existing arsenal underwent extensive refurbishment and modernization.”
The uptick in production has focused on key military assets, including combat aircraft, helicopters, unmanned aerial vehicles (UAVs), tanks, munitions, and missiles.
These increases align with Russia’s ongoing military efforts in Ukraine, which have driven demand for advanced weaponry and equipment upgrades.
Despite limited transparency, analysts agree that Russia’s wartime economy has prioritized scaling up arms production to sustain its prolonged offensive, highlighting the critical role of defense manufacturing in the nation’s strategy.
Arms Revenue Growth Across Asia and Oceania Driven by Regional Military Expansion
In 2023, the 23 companies from Asia and Oceania featured in SIPRI’s Top 100 saw a combined 5.7% increase in arms revenues, totaling $136 billion.
South Korean arms companies reported a remarkable 39% growth to reach $11.0 billion in revenue. Japan also saw significant gains, with its five arms producers posting a 35% rise, bringing their total to $10.0 billion.
Japan’s military build-up, a policy initiated in 2022, sparked a surge in domestic orders, with some companies seeing new order values skyrocket by more than 300%.
Meanwhile, China, the second-largest arms producer globally, generated $103 billion in revenue from nine companies in the Top 100.
However, due to economic pressures and structural challenges, the country experienced a slowdown in growth to just 0.7%, the smallest increase since 2019.
Despite this, Chinese arms firms are focused on modernizing the military with advanced systems like hypersonic missiles and stealth aircraft, crucial to China’s strategic interests in the South China Sea, Taiwan, and its border with India.
Meanwhile, India’s arms sector also saw growth, with revenues rising by 5.8% to $6.7 billion in 2023. The country’s three major arms companies—Hindustan Aeronautics, Bharat Electronics, and Bharat Dynamics—benefited from the government’s “Make in India” initiative, which aimed to reduce dependence on foreign suppliers and enhance domestic production, particularly in response to ongoing tensions with China.
Hindustan Aeronautics ranked 43rd globally and led India’s arms industry with $3.7 billion in revenues, which reflected a 6.9% increase. The company’s growth is closely tied to India’s push for self-reliance in producing indigenously designed light combat aircraft and helicopters.
Meanwhile, Taiwan’s National Chung-Shan Institute of Science and Technology (rank 47) continued its strong performance with a 27% increase in arms revenues to reach $3.2 billion.
This growth was propelled by growing domestic demand for missiles, UAVs, and radar systems, as tensions with China remained a major concern.
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