ThalesThales
RheinmetallRheinmetall
LeonardoLeonardo
Austrian Armed Forces (Bundesheer)Austrian Armed Forces (Bundesheer)
DiehlDiehl
GDELS-MOWAGGDELS-MOWAG
HENSOLDTHENSOLDT
Northrop GrummanNorthrop Grumman

On the night of 9 to 10 September 2025, around 20 Russian drones crossed into Polish airspace. NATO scrambled Polish F-16s and Dutch F-35s against them, and the fighters shot down up to four. The episode captures the defense outlook for 2027 better than any budget figure: Western forces have the money and the technology, and they lack the volume, the cheap effectors and the industrial depth to keep pace. Four constraints follow from the data of 2025 and 2026.

  • From budgets to factories. World military spending reached a record $2,887 billion in 2025, yet CSIS estimates the Iran war cut US Patriot interceptor stocks from about 2,330 to 759–827 by late July 2026, with rebuilding expected to take until at least mid-2029.
  • From exquisite to attritable. A Shahed-type drone costs about $50,000, a Patriot interceptor about $4 million. Buyers answer with volume, from collaborative combat aircraft in production since June 2026 to mass orders for drones and counter-drone systems.
  • From compliance to speed. The Pentagon suspended the next phase of its CMMC supplier certification in July 2026, and the EU is widening defense exemptions from chemicals and permitting law.
  • From sovereignty plans to American supply. Europe funds strategic autonomy, yet US suppliers delivered 58% of the major arms imported by European NATO states in 2021–25, and Germany and France reportedly suspended the FCAS fighter in June 2026.

Each constraint becomes a portfolio decision: which programs you can deliver at the rates customers now demand, which subsystems to redesign to remove ITAR-controlled or Chinese content, and where cheaper, attritable products compete with your own platforms. The defense trend radar below collects the evidence.

Explore the defense trend radar 2027+

The interactive ITONICS defense trend radar 2027+. Trends are rated by time to impact, from 0-2 to 10+ years, and by potential impact, from low to very high. 20 of 73 rate very high.

What's new in the 2027+ edition

The 2027 report tracks 73 trends, down from 156 in the previous edition. We kept 51 topics, rewrote each with a new thesis, and added 22 new trends.

What we removed

The previous edition repeated each theme across land, air, naval, space and cyber. That produced six trends on directed energy, six on alliances and 25 in the ecological category, most of them restating that sustainability matters. We merged overlapping entries into sharper ones and cut consensus statements that tell a defense audience nothing new. We also removed trends whose premise no longer holds.

New trends in the 2027+ edition

  • Interceptor stockpiles drained by the Iran war: magazine depth now limits US and allied air and missile defense more than radar or missile performance.
  • Munitions production capacity: shells, missiles and interceptors delivered per year have become the measure of deterrence.
  • The limits of drone warfare: drones cause most front-line casualties, and low hit rates for cheap FPV drones keep artillery in the fight.
  • Counter-drone defense as a mass market: airports, power plants and border agencies join armies as customers.
  • Shipbuilding capacity: US Naval Intelligence puts China's shipbuilding capacity at more than 232 times that of the US, measured in gross tonnage.
  • Rearmament wins exemptions from EU environmental law: chemicals and permitting rules give way to production speed.
  • Automotive suppliers converting plants to defense: Rheinmetall is turning its Berlin automotive parts factory into a line for 155 mm shell casings.
  • Conscription returns to Western Europe: Germany's new military service law took effect in January 2026 and builds the registration base for a draft if volunteers fall short.

How the ratings moved

Five trends moved up. Electronic warfare, cost per interception, and critical minerals rose from high to very high, and their impact now falls within the next two years, driven by the drone war, the interceptor bill of the Iran war, and Chinese export controls. Collaborative combat aircraft and space-based missile interception also reached very high, after the first CCA production contracts and Golden Dome's funding.

Three moved down. Swarm robotics fell from very high to medium, because battlefield mass comes from individually piloted drones. Hypersonic weapons fell to high, as their main effect narrows to pushing carrier groups away from contested coasts. Climate change and defense infrastructure fell to medium, as rearmament pushes the adaptation of bases down the budget queue.

Read together, the changes describe an industry whose constraint has moved from budgets to factories, minerals and people.

Land defense trends 2027+

Land warfare in Ukraine has become a contest between drones, electronic warfare and artillery, and Western armies are rewriting their force design around it. The industrial base matters as much as the battlefield. Shells, energetics and critical minerals limit what armies can field, and skilled labor limits how fast new plants run.

Three trends carry the largest consequences for land system portfolios:

Summary: Deterrence is now measured in shells, missiles and interceptors delivered per year. Production capacity, energetics and long-term framework contracts decide which states can sustain a high-intensity war beyond its first weeks.

Current situation: Rheinmetall's Unterlüß plant, Europe's largest ammunition factory, is expected to produce 140,000 155 mm shells in 2026 and reach its design capacity of 350,000 a year in 2027. In the US, Lockheed Martin is raising PAC-3 output toward 2,000 interceptors a year, and the Pentagon signed a seven-year Patriot production deal worth $58.6 billion in July 2026. CSIS estimates that rebuilding US Patriot and THAAD stocks to pre-war levels will take until at least mid-2029.

Expected development: Europe and the US move to multi-year munitions contracts with clauses that reserve capacity for surges. New plants spread across Central and Eastern Europe to reduce single points of failure. Energetics, propellants and fuzes, more than shell bodies, set the production ceiling.

Challenges: Supply of nitrocellulose, explosives and solid rocket motors remains concentrated in a few plants. Buyers must keep ordering after current crises ease, or the new capacity will close again as it did after the Cold War.

Time to impact: 0-2 years
Potential impact: Very high
STEEP segment: Economic
This year's trend development: New

Air defense trends 2027+

Air and missile defense is where the cost of modern war shows first. The war against Iran drained US interceptor stocks, Russian drones over Poland exposed thin low-level coverage in Europe, and drone incursions closed airports in Copenhagen, Oslo, and Munich in autumn 2025. On the offensive side, uncrewed fighters have entered production.

For air and missile defense programs, three trends matter most:

Naval defense trends 2027+

Naval power is being redefined at both ends of the cost scale. Ukraine pushed Russia's Black Sea Fleet out of the western Black Sea with drone boats, while China's shipyards out-build every rival. The Hormuz crisis of 2026 put chokepoints, mines and convoy escort back at the center of naval planning.

Three trends reshape fleet and shipyard planning:

Space defense trends 2027+

Space has become an operational warfighting domain, and budgets now treat it as one. In September 2025, Germany announced €35 billion for military space by 2030, citing two Russian Luch-Olymp satellites that tracked Intelsat satellites used by the Bundeswehr, and said it must consider offensive space capabilities. In the US, Golden Dome puts missile defense into orbit, while commercial providers set the pace and the price of military space.

Three trends decide where space budgets go next:

Cyber defense trends 2027+

Cyber operations now run ahead of any shooting war. US agencies warned in 2024 that the Chinese group Volt Typhoon had gained access to US critical infrastructure networks to prepare disruptive attacks, and Salt Typhoon penetrated major telecom providers. At the same time, AI agents have taken over much of the tactical work of hacking, and US acquisition policy now trades certified supplier security for speed.

Three trends change what defense suppliers must deliver in cyber:

Download the full list of all 73 defense trends (each with its current situation, expected development, challenges, and ratings) for sharing with your colleagues, your next strategy review, or portfolio workshop.

Download all 73 defense trends 2027+

In ITONICS, defense R&D and strategy teams link every trend to the programs and roadmaps it affects, so companies like Rheinmetall, Northrop Grumman and Hensoldt can see which programs gain or lose relevance as conditions change. 

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