With the US's Biden administration imposing an arms trade ban on Saudi Arabia over its intervention in Yemen, the defense industry arm of the Kingdom’s sovereign wealth fund PIF is pushing ahead with military product development and weapon system projects.

The Saudi Arabian Military Industries (SAMI) announced today that it aims to generate annual revenue of US$5 billion by 2030. Chief Executive Walid Abukhaled told Reuters that SAMI aimed to be among the world’s top 25 defense firms by 2030. Although increasing restrictions on arms sales to Saudi Arabia are spurring indigenization, SAMI’s development aligns with Vision 2030, with PIF playing a central role.

In the wake of the Biden administration’s sanctions, SAMI is signing deals with the UAE’s military vehicle producer NIMR and US firm Lockheed Martin. The 51:49 joint venture between SAMI and Lockheed Martin, signed at the International Defence Exhibition and Conference (IDEX) in Abu Dhabi at the weekend, will develop capabilities in manufacturing and software technologies, systems integration, and the production, maintenance, and repair of rotary and fixed-wing aircraft, and missile defense systems, SAMI said. Lockheed Martin is also assisting with the creation of a US$15 billion missile defense system in Saudi Arabia.

SAMI was set up in 2017 specifically to reduce reliance on imported arms to enable the government to spend 50 per cent of its military budget on domestically manufactured materiel by the end of the decade. By indigenizing arms supplies through ventures with foreign firms, SAMI can circumvent arms export controls and access cutting edge technology. Saudi Arabia has the third-biggest defense budget in the world, estimated at more than US$70 billion.

Speaking to Defense News, Abukhaled’s predecessor Andreas Schwer said in November that SAMI had signed “more than 25 agreements with foreign partners, so we have multiple opportunities to acquire alternative technologies from other partners where there are no limitations. There is no risk that any limitation of a single country or government can block Saudi Arabia from getting a full localized portfolio of products.”

With his mind possibly on the outcome of the US presidential election, Schwer added, “If the US blocks us, we still have the opportunity for almost any of the products and any of the weapon systems to get it localized through our partnerships. Opportunities can be European, Asian, South African and Far East sources” – indicating a potential Chinese partnership.

SAMI’s business plan involves three phases. The first phase from 2017 to 2019 was focused on setup and definition, followed by a three-year phase to end-2023 of rollout of production lines. The last phase is a stable growth phase.

Related funds PIF