The full-scale war in Ukraine and geopolitical tensions around the world contributed to a sharp increase in the demand for weapons and military equipment. However, despite demand, many US and European companies have been unable to significantly increase production capacity due to labor shortages, costs and disruptions in supply chains.
This is stated in the report of the Stockholm International Peace Research Institute (SIPRI).
In 2022, the revenue from the sale of weapons and military services of the 100 largest companies in the industry amounted to $597 billion — 3.5% less than in 2021, even despite the sharp increase in demand.
"Many arms companies faced obstacles in adjusting to production for high-intensity warfare. However, new contracts were signed, notably for ammunition, which could be expected to translate into higher revenue in 2023 and beyond," noted director of SIPRIʼs Military Expenditure and Arms Production Program Lucie Béraud-Sudreau.
40 American companies account for 51% of the total revenues from arms sales in the top 100, and their revenues will decrease by 7.9% to $302 billion in 2022.
Arms revenues of the 22 companies from Asia and Oceania included in the rating increased by 3.1% and reached $134 billion in 2022. This is the second year in a row that the revenues from arms sales of the first hundred countries in Asia and Oceania exceed those of Europe.
Revenues from arms sales of 26 companies from the first hundred based in Europe increased by 0.9% and reached $121 billion in 2022.
"The war in Ukraine created demand for materiel suited to a war of attrition, like ammunition and armoured vehicles. Many European producers of these items saw their revenues grow. They included companies based in Germany, Norway and Poland," said a researcher of the SIPRI Military Expenditure and Arms Production Program Lorenzo Scarazzato.
The Middle East saw the largest percentage increase in arms sales revenue of any region in 2022, as all seven Middle Eastern companies in the top 100 recorded significant growth. Their total arms revenue of $17.9 billion was up 11% year over year.
“Ukroboronprom” was also included in the rating, but its revenues from weapons fell by 10% in real terms, to $1.3 billion.
Global military spending, according to SIPRI, increased by 3.7% in real terms last year and reached a new high.