Israeli defense companies signed new export orders worth a record $13.073 billion in 2023, the Ministry of Defense International Defense Cooperation Directorate (SIBAT) reports. This is the third consecutive year in which the record has been broken with new orders worth $12.5 billion in 2022, and $11.3 billion in 2021.
The major interest in Israel's air defense systems included the historic $3.5 billion sale of Israel Aerospace System's (IAI) Arrow 3 to Germany and the sale of Rafael's David's Sling to Finland for $317 million. SIBAT's figures showed that 36% of the deal amount in 2023 was in air defense systems, compared with 19% in 2022.
On the other hand, there was a substantial fall in new orders for unmanned aerial vehicle systems and drones from 25% in 2022 to just 4% in 2023. Radar systems represented 11% of the amounts of new orders last year, compared with 13% in 2022 while rocket launchers rose to 11% last year from 5% in 2022. Other export orders according to percentage were avionics and manned aircraft 5% (10% in 2022), ammunition and munitions 8% (4%), surveillance and optronics 5% (10% in 2022), vehicles and armored vehicles 5% (5%), intelligence and cybersecurity 4% (4%), communications 4% (6%) and naval systems 1% (1%).
Changing trends
An interesting change from 2022 was the sale of two OptSat500 satellite systems to Azerbaijan by IAI for $120 million, representing 2% of defense orders. Changing trends arose from the geographical segmentation. In the shadow of the threat from China, the Asia-Pacific region remained the source of the bulk of orders, jumping from 30% to 48%. Demand greatly benefited from the Russia-Ukraine war in Europe, with orders rising from 29% to 35% of the total. The exact opposite trend was seen from the countries of the Abraham Accords, which after a jump from 7% in 2021 to 24% in 2022, dropped drastically to only 3% last year. In Israel, there is no alarm from this data, because there have been deals with Gulf countries since the beginning of the year, which resulted from terms and conditions from 2023 that matured in 2024.Regarding the other continents: North America - 9% (after 11% in 2022), Latin America - 4% (3% in 2022), and Africa - 1% (3% in 2022).
Segmentation of contracts according to financial size shows that transactions larger than $100 million accounted for 40% (after 48% in 2022). Deals between $50 and $100 million dollars accounted for 17% (12% in 2022), up to $50 million - 23% (20% in 2022), and up to $10 million - 20% (similar to 2022).
Challenges during the war
The SIBAT figures also show the challenges faced by Israeli defense companies following the start of the war. Firstly, the backlog of orders continued to grow, even though in the last quarter of 2023 companies were required to provide large quantities of products and systems to support the war. Furthermore, in the international arena, Israel has faced a series of embargos, the likes of which the country has not faced in five decades.
"Exceptional achievements"
Minister of Defense Yoav Gallant said, "Even in a year when the State of Israel is fighting in seven different arenas, the defense exports of the State of Israel have succeeded in continuing to break records. This fact is a badge of honor, first and foremost, for our defense industries and the creative and talented minds that work in them and drive them to heights of breakthrough and innovation. This year's figures show that even though our defense industries are harnessed in their order of priority for the success of the war effort, they continue to sign more and more significant export deals.
Published by Globes, Israel business news - en.globes.co.il - on June 17, 2024.
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