Growth Opportunities in European Missile Defense, 2024 2029

The Impact of the Top 3 Strategic Imperatives on the European Missile Defense Industry

Disruptive Technologies

Why

• Artificial intelligence (AI) gained massive relevance in the past two years because of the rise of its generative applications.
• The European Union (EU) is one of the leading regions in terms of legislation related to this technology and risk-based classification of its uses.

Frost Perspective

• The recently passed AI Act excludes military applications of the technology from its scope, leaving its regulation to the EU treaty and the international public law.
• With the dual use of this technology, however, the framework can impact commercial innovation that often translates into the military sphere.

Geopolitical Chaos

Why

• The war between Russia and Ukraine propelled most European countries to increase their defense spending for two reasons.
• Some intended to boost their military capabilities to prepare for a potential Russian attack, as in the case of countries bordering Ukraine, such as Poland.

Frost Perspective

• Others concentrated on sending multiple military aid packages to the affected country (e.g., France and the United Kingdom).
• A large part of this funding was and will continue to be invested in missile defense capabilities. The war reignited the discourse regarding buying locally made missiles or importing them.

Industry Convergence

Why

• Sustainability is a key priority for most European countries because they intend to implement green regulations across industries.
• Manufacturers, including those from the defense sector, must comply with these regulations to remain or become successful in the market.

Frost Perspective

• Frameworks, such as the Military Green vehicle, are pushing the European defense industry to use sustainable fuel for aircraft and missiles. This initiative is still nascent.
• Countries, however, have achieved greater success in making military installations more energy efficient.

Scope of Analysis

Spending data was obtained from official international organizations and the defense department’s websites, as well as news outlets in cases where defense departments do not disclose contract information.

The study does not include classified spending information, making a portion of the total missile defense market spending information unreportable.

Segmentation

Missile Classification (with global examples)

Type

Trajectory of the missiles

• Cruise missiles (BrahMos | India)
• Ballistic missiles (JL-3 | China)

Launch Mode

Firing source and target of the missiles

• Surface (ground or sea)-launched missiles (RIM-162 | United States)
• Submarine-launched missiles (M51 | France)
• Air-launched missiles (Meteor | Europe)
• Anti-tank missiles (FGM-148 Javelin | United States)
• Anti-ship missiles (RK-360MC Neptune | Ukraine)

Range

Reach (in kilometers) of the missiles

• Short-range missiles / < 1,000 km (LORA | Israel)
• Medium-range missiles / 1,000 – 3,000 km (DF-17 | China)
• Intermediate-range missiles / 3,000 km – 5,500 km (Hyunmoo-5 | South Korea)
• Intercontinental or Long-range missiles / > 5,500 km (R-36M | Russia)

Propulsion

Type of fuel used by the missiles

• Solid-fueled missiles (Trident II D5 | United States)
• Liquid-fueled missiles (UR-100N | Russia)
• Hybrid-fueled missiles (No current examples found)

Guidance System

Guidance technology used by the missile to reach its target

• Wire guidance (MILAN | France)
• Command guidance (Akash | India)
• Terrestrial guidance (Storm Shadow | United Kingdom and France)
• Inertial guidance (Poseidon C-3 | United States)
• Beam rider (radar or laser) guidance (Skif | Ukraine)
• Radiofrequency and GPS reference (AGM-158B JASSM-ER | United States)

Note: Missile examples are only for illustrative purposes, and the examples used are from various countries.

Growth Drivers

• The war in Ukraine propelled the European defense industry to ramp up production to meet the high demand for military equipment in the region. The acquisition of cutting-edge technology, including missiles, is crucial for many countries to maintain their military strength and ensure their national security against adversaries.
• Several European companies have formed industrial alliances with foreign businesses to manufacture or co-produce certain missile designs locally. This strategy helps foster local industries and the creation of economies of scale. Examples include the partnership between Raytheon and MBDA to jointly build long-range Patriot missiles in Germany.
• In the last 5 years, international organizations and national governments have launched defense-related funding programs and strategies to boost European defense companies, especially for small businesses. This is the case with the EU’s European Defense Fund (EDF) and the Defense Industrial Strategy. Missile defense is a key axis of both initiatives.

Growth Restraints

• Europe has a consolidated defense industry; however, the region still greatly relies on the United States to provide missile systems to outnumber Russia’s arsenal. Currently, there is uncertainty as to who might win the US presidential elections in November 2024, which might affect defense equipment transfers and NATO funding.
• Following the reignition of the Ukraine conflict, multiple nations have undermined the buildup of their missile defense capabilities to instead produce and rapidly dispatch equipment to Ukraine. This has caused missile shortages, particularly long-range strike capabilities, that are incompatible with today’s modern warfare requirements.
• European countries have diverse opinions regarding missile defense procurement and the origin of the equipment. Such misalignment creates tension between nations and can delay joint acquisition processes. Some nations promote buying missile systems from outside of Europe, while others prefer local system development.