The conflict between Russia and Ukraine has become a boon for the global defence industry as governments around the world have significantly increased military spending in response to the deteriorating security environment. The conflict has sparked a surge in demand for a wide range of military equipment - from small arms to advanced missile systems - and arms companies are working around the clock to meet this demand. Here is the fourth part of our analysis, focusing on the defence industry, profits, production and geopolitical influence.
In particular, the conflict highlighted the importance of a strong and resilient defence industrial base and led to a renewed emphasis on investment in new technologies and improving the efficiency of production processes. At the same time, the defence industry has benefited greatly from the geopolitical tensions that the conflict has generated, as states seek to strengthen their military capabilities as a means of deterring potential adversaries.
Record profits for global arms companies
The conflict between Russia and Ukraine has led to record profits for global arms companies. The surge in demand for military equipment has caused a significant increase in revenues for companies producing a wide range of weapons systems. At the same time, the share prices of these companies have risen significantly as investors bet on the long-term growth of the industry. However, the profits of arms companies are a matter of controversy - some argue that they are profiting from the suffering of others, while others argue that these profits provide a necessary incentive to invest in research and development of technologies crucial to national security.
Analysis of SIPRI data on arms industry revenues
Data from the Stockholm International Peace Research Institute (SIPRI) show that the global arms industry has seen significant revenue growth in recent years. The world's 100 largest arms manufacturing and military services companies sold $679 billion worth of weapons in 2024, an increase of 5.9 % year-on-year (Meduza). This growth is largely due to increased demand caused by conflict. The data also shows that the United States continues to dominate the global arms market, with 42 of the top 100 companies based here.
The SIPRI data also reveal several trends: the industry is increasingly consolidating (dominance of a smaller number of large firms) and at the same time globalising as companies from a wider range of countries enter the market.
Case Study: Lockheed Martin and RTX (USA)
Lockheed Martin and RTX (formerly Raytheon Technologies) are among the largest defense contractors in the United States. They have significantly increased their revenues and profits since the conflict began. Lockheed Martin is the largest weapons company in the world and produces a wide range of systems, including the F-35 fighter jet and Javelin anti-tank missiles. RTX is a key manufacturer of air defence systems and a major arms supplier to Ukraine.
Both companies are benefiting from the growth in US military spending and their growth is expected to continue. Lockheed Martin, which produces the HIMARS and GMLRS systems vital to Ukrainian operations, was awarded a $4.8 billion US Army contract in April 2023. RTX, through its Raytheon Missiles and Defense division, was then awarded a contract worth up to $1.2 billion to supply six NASAMS systems to Ukraine.
Case study: Rheinmetall and European defence giants
Rheinmetall is one of Europe's largest arms companies and benefits significantly from the growth of military spending in Europe. The company produces tanks, artillery and ammunition and is a key supplier to Ukraine. At the same time, it has seen a sharp increase in orders from European countries and is investing in expanding its production capacity.
Other European companies, such as BAE Systems and Thales, have seen similar growth. Rheinmetall, for example, significantly strengthened its position thanks to new contracts and a sharp rise in its share price.
The role of „other relevant corporations“
The conflict has also highlighted the role of technology firms and private military companies. They provide services ranging from intelligence to logistics and contribute to blurring the lines between the public and private sectors. Their role is controversial - some see it as necessary, others point to problems of accountability and control.
Palantir Technologies: AI, tracking and data analytics
Palantir Technologies has played a significant role by providing analytical software to the Ukrainian government to help track Russian troop movements and identify targets. The company's technology is also used by the US and other Western countries.
This shows the growing importance of AI and data in modern warfare, but also raises concerns about surveillance and the erosion of civil liberties. CEO Alex Karp confirmed that the firm's technology is involved in targeting Ukrainian weapons.
Rise of new defence and technology companies
The conflict has fostered a new generation of companies developing technologies such as drones and cyber weapons. It serves as a real-world testing platform and a marketing tool.
For example, the Turkish company Baykar, maker of the Bayraktar TB2 drone, is on track to reach $1.9 billion in sales in 2024, showing the huge potential of cheaper unmanned systems.
Impacts on global arms markets and production
The conflict has fundamentally affected global markets and production. Increased demand has led to increased production and highlighted the need for a strong industrial base. It has also encouraged investment in technology and production efficiency.
Growing demand and pressure on supply chains
Unprecedented demand for weapons and ammunition has strained global supply chains, created bottlenecks and forced rapid production ramp-ups. Conflict has shown that modern warfare consumes material far faster than peacetime production capacities can match.
Companies are therefore investing in expanding production, but at the same time the weaknesses of global supply chains, especially for key components, are becoming apparent. This is leading countries to place greater emphasis on domestic production and reduce dependence on foreign suppliers.
Lobbying and political influence of arms companies
Record profits have also translated into growing political influence in the defence industry. Companies are investing billions in lobbying to influence decision-making and ensure a steady flow of contracts.
According to the December 2025 report, the lobbying budgets of major European arms firms increased by 40 % between 2022 and 2023, with the ten largest firms doubling their spending in Brussels to €5.6 million over five years.
This creates a „gold rush“ environment in Brussels and strong pressure on politicians to channel funding into defence - for example, through the EU's ReArm Europe plan, which is expected to mobilise up to €800 billion in new spending.
In the next episode China's Strategic Position: Finding Balance in a Changing Global Order
You can read the previous part here: Money flows: financing the war and rebuilding the country
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