Summary

The Saudi Arabia C4ISR market is estimated to register a CAGR of over 4% during the forecast period (2021-2030).

Saudi Arabia’s military expenditure was USD 57.5 billion in 2020, which is 8.4% of the country’s GDP. However, spending in 2020 is 10% lower than that in 2019, which can be attributed to the economic impact of the COVID-19 pandemic, decrease in oil revenues, and the increased focus of the government towards non-military sectors like healthcare and social development. The country is further expected to reduce its defense expenditure in the years to come, which is expected to challenge the growth of the C4ISR market in the country during the forecast period.

Nevertheless, the defense spending of the country is still the sixth-highest in the world, which enables the country to focus on its objective of military capability modernization. The factors like growing threats from adversaries and increasing territorial tensions and growing risk from asymmetric warfare in the region are propelling the military to enhance its battlefield data-sharing capabilities.

There is a growing emphasis on increasing the investments towards the integration of advanced technologies like machine learning and artificial intelligence into C4ISR solutions to enhance the efficiency and situational awareness of the military personnel. Saudi Arabia made Data and Artificial Intelligence as key focal points of its Saudi Vision 2030, which is expected to propel the market growth in the coming years.

Key Market Trends

Saudi Vision 2030 is Expected to Drive the Market Growth

Despite the huge defense spending, Saudi Arabia has lagged in developing its local defense industry over the years. Between 2013 and 2017, 90% of Saudi Arabia’s military expenditure went to foreign companies. However, in April 2016, the Saudi government initiated the Vision 2030 program which aims to bolster the infrastructure and capabilities of the local defense industry, increasing its local purchases of military equipment to 50%. As part of Vision 2030, in February 2021, Saudi Arabia announced its plan to invest more than USD 20 billion in its domestic military industry over the decade as part of aggressive plans to boost the local defense industry. The country also plans to increase its military R&D spending from 0.2% to around 4% of its expenditure by 2030. The Saudi government facilitated the formation of the General Authority of Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI) to develop the national military manufacturing capabilities. Advanced Electronics Company (AEC), a company acquired by SAMI in 2019, has developed several new electronic warfares, C4ISR, electronics, and cybersecurity solutions in the last few years, and is currently aiming at increasing its defense capabilities over the next decade, as part of the Saudi Vision 2030 program. Being a state-owned local defense contractor, the company is expected to hold a significant share in the country’s C4ISR market during the forecast period. Besides, local defense contractors are increasing efforts to establish joint ventures with foreign defense companies like Lockheed Martin Corporation, Raytheon Technologies Corporation and L3 Harris Technologies Inc. for the design, assembly, manufacture, and maintenance of military equipment. On the other hand, in 2020, the Saudi Data & AI Authority launched the country’s National Strategy for Data and Artificial Intelligence to make it a global AI leader by 2030. This is also expected to drive the integration of such emerging technologies into C4ISR systems in the country in the years to come.

Naval Modernisation Initiatives to Propel the Revenues of the Sea Segment

Over the years, Saudi Arabia started to focus on upgrading its relatively small and outdated naval arm. The country is currently working on a huge armed forces modernization project with a particular focus on the Royal Saudi Naval Forces (RSNF), which use to receive less attention as compared to the Air Force or Army. The program, called the Saudi Naval Expansion Programme (SNEP II) particularly focuses on modernizing the outdated East Naval fleet. The RSNF is procuring naval vessels, fixed-wing aircraft, helicopters, and UAVs, which will be equipped with advanced data sharing and situational awareness capabilities, as part of the program. The procurement of such platforms is expected to generate significant demand for related C4ISR systems in the coming future. On the other hand, the country has allocated USD 18 billion for the Royal Saudi Navy’s extensive planned C4I command and control and intelligence-sharing network. This project includes large-scale upgrades to facilities, hardware, and software that support naval forces, including the country’s small marine and naval special warfare contingents. In October 2020, the US awarded a USD 49.5 million single-award task order to Science Applications International Corp. (SAIC) to continue to provide the Royal Saudi Naval Forces support services for C4ISR upgrade and refurbishment. Earlier, SAIC was named a prime contractor for the SeaPort Next Generation contract worth USD 10 billion in 2018. The contract has a five-year base period of performance and a five-year ordering period option. Such developments are expected to drive the growth of the Sea segment during the forecast period.

Competitive Landscape

Some of the prominent players in the Saudi Arabia C4ISR market are Saudi Arabian Military Industries, General Dynamics IS&T Arabia (General Dynamics Corporation), Lockheed Martin Corporation, Raytheon Technologies Corporation, and L3Harris Technologies Inc. With the growing focus on the localization of the defense industry, the country is expected to invest in the capability enhancement of the local players. This is expected to boost the growth of the Saudi Arabian Military Industries (SAMI), which has enhanced its presence in the C4ISR market by acquiring Advanced Electronics Company in 2020, which is the largest military industry deal ever concluded in Saudi Arabia. On the other hand, foreign players are formulating new strategies to expand their presence in the country and capture new contracts from the armed forces. These players in the market are actively participating in forming JVs and partnerships with the local manufacturers to expand their presence in the country. In addition to such plans, investments into R&D for the development of C4ISR systems integrated with technologies like AI and quantum networking are also anticipated to help the companies increase their market share during the forecast period.

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Table of Contents

1 INTRODUCTION
1.1 Study Assumptions
1.2 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Industry Attractiveness - Porter's Five Forces Analysis
4.4.1 Threat of New Entrants
4.4.2 Bargaining Power of Buyers/Consumers
4.4.3 Bargaining Power of Suppliers
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry

5 MARKET SEGMENTATION (Market Size by Value - USD million)
5.1 Platform
5.1.1 Air
5.1.2 Land
5.1.3 Sea
5.1.4 Space

6 COMPETITIVE LANDSCAPE
6.1 Company Profiles
6.1.1 Saudi Arabian Military Industries
6.1.2 SAIC
6.1.3 Lockheed Martin Corporation
6.1.4 Raytheon Technologies Corporation
6.1.5 L3Harris Technologies Inc
6.1.6 General Dynamics IS&T Arabia (General Dynamics Corporation)
6.1.7 Kratos Defense & Security Solutions, Inc.
6.1.8 Thales Group
6.1.9 Northrop Grumman Corporation
6.1.10 Aselsan A.S.
6.1.11 BAE Systems plc

7 MARKET OPPORTUNITIES AND FUTURE TRENDS