At a time when global supply chains are being reconfigured and industrial power dynamics are shifting, Saudi Arabia’s defense sector is undergoing a transformation that extends well beyond its traditional mandate. What is emerging is a more integrated economic role — one that sits at the intersection of investment, advanced manufacturing, and technology development. This shift is not only visible in the scale of activity, but in how the sector itself is being structurally rebuilt.

Inside Saudi spoke with Salman Nasser Al Shathri, Chairman of the National Committee for Military Industries and Chairman of INTRA Defense Technologies, a leader in unmanned and autonomous systems, to examine how this transformation is taking shape and what it signals from an investment perspective.

At its core, this evolution begins with a redefinition of the sector’s role within the broader economy, positioning it as a driver of diversification and domestic capability building. As Al Shathri explains:

"The transformation reflects a deliberate move toward economic diversification and resilience, reducing reliance on external supply chains. By investing in local capabilities, Saudi Arabia is strengthening its industrial base while creating high-value jobs. The defense sector is becoming a catalyst for technology transfer and innovation. Even amid global uncertainty, this approach enhances long-term sustainability. It positions the Kingdom as both a reliable partner and a competitive industrial hub."

This direction is increasingly reflected in how the sector is structured today, with a clear shift toward a more defined and investable model.

"The sector has clearly evolved beyond a government spending model into a structured investment platform. Today, we see increasing private sector participation, joint ventures, and foreign direct investment. Regulatory frameworks and localization targets are creating predictable, bankable opportunities. This shift is attracting both strategic and financial investors. It is no longer limited to procurement — it is fundamentally about value creation and return on investment."

As this model expands, localization emerges as a central mechanism in rebuilding the sector from within, translating policy into fully integrated domestic value chains.

"Localization is driving the creation of entire value chains within the Kingdom, from manufacturing to R&D. This opens opportunities for SMEs, global partnerships, and technology transfer initiatives. As capabilities mature, Saudi Arabia is becoming more competitive regionally and globally. It also enhances supply chain security and operational readiness. Ultimately, localization is turning policy into measurable economic and industrial outcomes."

Within this framework, local companies are taking on a more defined role in shaping capabilities and building technical depth across the ecosystem.

"INTRA is focused on building advanced capabilities in autonomous systems through local design, development, and manufacturing. We actively invest in talent development and foster partnerships with leading international technology providers. Our role goes beyond production: we are helping establish a knowledge-based ecosystem. This aligns with national priorities around localization and innovation. Our growth reflects the accelerating momentum of the sector as a whole."

As capabilities evolve, the scope of application is broadening, particularly through the development of dual-use technologies that extend beyond traditional defense boundaries.

"Yes, the shift toward dual-use technologies is both clear and strategic. Innovations in AI, unmanned systems, and sensing technologies are being developed for cross-sector applications. This increases commercial viability and shortens innovation cycles. It also supports broader economic diversification under Saudi Vision 2030. Dual-use development ensures sustainability and expands access to global markets."

At the same time, the combination of market scale, institutional support, and regulatory evolution is reinforcing Saudi Arabia’s position as an increasingly attractive destination for global investors.

"Saudi Arabia is considered one of the top ten countries in terms of military spending. With the government providing dedicated support through the General Authority of Military Industries (GAMI) and the General Authority for Defense Development (GADD), alongside a range of enabling programs — including financial incentives, R&D initiatives, long-term contracts, training programs, tax and fee exemptions, and export and licensing frameworks — the investment environment continues to strengthen. In parallel, the regulatory landscape is evolving to support foreign investment and joint ventures. The Kingdom’s geographic position further enhances access to multiple high-growth regions, making it a compelling destination for global defense and technology investors."

Looking ahead, the center of gravity is expected to shift more decisively toward the private sector, which is set to play a leading role in the next phase of growth.

"The private sector will be a primary driver of innovation, efficiency, and scalability in the next phase. Companies are expected to lead in technology development, partnerships, and commercialization. This shift enables faster decision-making and greater competitiveness. It also reduces the burden on public spending while maximizing economic impact. Ultimately, a strong private sector is essential to sustaining long-term growth in the defense ecosystem."