By Vegim Krelani

The arms industry has always been a reflection of the world’s evolving geopolitical landscape, technological progress and resource dependencies. In recent years, however, this sector has undergone a significant transformation, driven by groundbreaking innovations, the pursuit of strategic autonomy and a rethinking of supply chain strategies. From cutting-edge weapons systems to the race for critical raw materials, the reshaping of the arms industry reflects a confluence of challenges and opportunities shaping global security in the 21st century.

Technological advancements: A new era of warfare

The arms industry is witnessing a paradigm shift as technology evolves at an unprecedented pace. Among the most notable developments are artificial intelligence (AI), autonomous systems and hypersonic weapons. In the United States, the Pentagon has increasingly invested in these technologies to maintain a competitive edge. For instance, Lockheed Martin and Raytheon have spearheaded the development of hypersonic missile systems capable of traveling at speeds exceeding Mach 5, rendering traditional defense mechanisms obsolete.

AI has become integral to modern military strategies, enabling the development of autonomous drones, surveillance systems and decision-making tools. DARPA’s Mosaic Warfare program exemplifies how the U.S. military envisions decentralized systems working in tandem to overwhelm adversaries. Similarly, autonomous drones such as the MQ-25 Stingray are redefining airpower by taking on roles traditionally reserved for manned aircraft.

Global players are not far behind. China, for example, has heavily invested in AI for military applications ranging from facial recognition systems for surveillance to combat drones. Meanwhile, countries like Turkey have emerged as formidable players in drone technology, exemplified by the success of its Bayraktar TB2 in recent conflicts. These advancements highlight the arms industry’s pivot toward leveraging technology to achieve tactical and strategic superiority.

Raw materials: The new arms race

Behind every missile, drone or advanced sensor lies a network of raw materials essential to their creation. Rare earth elements (REEs), such as neodymium, terbium and dysprosium, are crucial for manufacturing everything from guidance systems to electric vehicles. This dependency has spurred a global race for securing supplies, particularly as China controls over 60% of global REE production.

The U.S. and its allies have taken steps to reduce reliance on Chinese rare earths. Australia, a major player in REE extraction, has partnered with the U.S. to develop alternative supply chains. For example, Lynas Rare Earths, an Australian mining company, is building a processing facility in Texas with U.S. government support. This move aligns with Washington’s broader effort to decouple critical supply chains from geopolitical adversaries.

Europe is also making strides. The European Union has launched initiatives such as the European Raw Materials Alliance to secure critical materials for its defense and green energy sectors. These efforts underscore how raw materials have become a strategic focal point in reshaping the arms industry.

However, the scramble for these resources is not without its challenges. Environmental concerns and geopolitical tensions often complicate mining operations, as seen in Greenland, where domestic opposition has delayed projects backed by international investors. The balancing act between securing resources and maintaining environmental sustainability adds another layer of complexity to the arms industry’s transformation.

Geopolitical shifts: A multipolar arms market

The changing geopolitical landscape has significantly impacted the arms industry, fostering new alliances and rivalries. The war in Ukraine serves as a recent reminder of how armed conflicts can reshape global security paradigms. NATO’s increased military spending and commitments to modernizing its forces have provided a boon to Western defense contractors, with companies like BAE Systems and Rheinmetall reporting record orders for advanced weaponry and ammunition.

Conversely, the conflict has also exposed vulnerabilities in global supply chains. The reliance on single-source suppliers for critical components, from semiconductors to missile guidance systems, has highlighted the need for diversification. Countries are increasingly seeking to develop indigenous defense capabilities to reduce dependence on external suppliers. For instance, India’s Atmanirbhar Bharat initiative aims to bolster domestic arms production, with indigenous platforms like the Tejas fighter jet and Arjun main battle tank gaining prominence.

Another geopolitical shift lies in the arms industry’s pivot toward non-traditional markets. Middle Eastern countries, long reliant on Western suppliers, are now investing heavily in domestic production capabilities. Saudi Arabia’s Vision 2030 includes plans to localize 50% of its military spending by 2030, a move that has led to joint ventures with international firms such as Boeing and Lockheed Martin.

Meanwhile, the rise of regional powers like South Korea and Israel underscores the decentralization of the global arms market. South Korea’s K9 Thunder howitzer and Israel’s Iron Dome system have become sought-after products, demonstrating how these nations have leveraged their technological expertise to carve out niches in the industry.

A future shaped by innovation and adaptation

The reshaping of the arms industry is far from complete, as the challenges of modern warfare, resource competition, and shifting alliances continue to evolve. Emerging technologies such as quantum computing and directed energy weapons promise to redefine the battlefield once again. The U.S. Navy’s development of laser weapon systems and China’s progress in quantum communication are just glimpses of what lies ahead.

At the same time, the industry faces growing scrutiny over ethical considerations. The proliferation of autonomous weapons, often called “killer robots,” has sparked debates about the role of human oversight in warfare. International bodies, including the United Nations, are grappling with the need to regulate these technologies to prevent unintended consequences due to the potential for collateral damage higher than before.

As the arms industry navigates these complexities, one thing is clear: its ability to adapt and innovate will determine its relevance in a rapidly changing world. The blending of classical defense strategies with cutting-edge technology, coupled with a focus on securing resources and managing geopolitical shifts, will shape the future of global security.

In this new era, the arms industry is not merely reshaping itself—it is redefining the contours of power and influence on the global stage.