Will defense tech keep growing without Ukraine?

What would “without Ukraine” actually mean for defense tech?

For defense tech, “without Ukraine” should mean a sharp fall in wartime orders and battlefield testing after a ceasefire, while Russia remains a military threat.

That is the most realistic version of the question. Fighting could stop without Russia demobilizing, Europe trusting Moscow again or NATO cancelling its new defense plans.

A ceasefire would quickly affect products that are being consumed every day. Ukraine would need fewer artillery shells, replacement vehicles, tactical drones, electronic-warfare devices and emergency deliveries. Western military aid could also fall sharply.

The effect on long-term programs would be smaller. Governments would still need to rebuild ammunition reserves, train larger forces and protect cities, ports, power plants and military bases. Ships, aircraft, satellites and missile-defense networks would remain under contract for years.

A true collapse in defense demand would require a much broader peace. Europe would have to feel safe from Russia, Asian tensions would need to ease, and governments would have to regain enough confidence to cut their armed forces again. Ending one war alone would not create that environment.

If you want more recent data on this point, please see our latest defense tech market report.

Did Ukraine create today’s defense-tech boom?

Ukraine accelerated today’s defense-tech boom dramatically, but global military spending had already been rising for years.

European NATO members started increasing defense budgets after Russia annexed Crimea in 2014. China was expanding its armed forces. Japan was reconsidering its postwar defense limits. The United States was shifting more attention toward military competition in the Indo-Pacific.

SIPRI has now recorded 11 consecutive years of growth in global military expenditure. The full-scale invasion arrived during an existing upward cycle and pushed it into overdrive.

Ukraine changed what governments wanted and how quickly they wanted it. European armies suddenly discovered that their ammunition reserves were too small. Air-defense systems had to protect civilian infrastructure as well as military targets. Cheap drones began destroying equipment worth hundreds of times more than the drone itself. Electronic warfare could make a recently purchased system far less useful within weeks.

That combination brought money and urgency into areas that had previously struggled for attention. The war gave defense startups customers, investors and a clear explanation for why their products were needed immediately.

Ukraine explains the speed of the boom. It does not explain the whole boom.

Is global defense growth now bigger than the Ukraine war?

Global defense growth is now clearly bigger than the Ukraine war, even though Ukraine remains an exceptionally large weapons buyer.

SIPRI’s latest figures put global military spending at $2.887 trillion in 2025, up 2.9% after inflation. Europe increased spending by 14%, while Asia and Oceania increased it by 8.1%. Those two regions added enough expenditure to offset a 7.5% drop in the United States.

Ukraine was the world’s largest importer of major arms during 2021–2025, accounting for 9.7% of global imports. That is an extraordinary share for one country, especially compared with only 0.1% during 2016–2020.

Yet arms imports cover only part of the defense economy. They leave out most domestic weapons production, military personnel, maintenance, classified programs, construction, training, research and cyber operations.

Europe now accounts for one-third of international major-arms imports. Asia and Oceania account for almost another third. The Middle East represents roughly one-quarter, despite a recent decline in its import volume.

Different threats are driving each region. Russia dominates European planning. China and North Korea shape Asian budgets. Missile and drone attacks keep air defense high on the agenda in the Middle East. Ukraine intensified this global movement without becoming its only cause.

Market	Recent evidence	Main source of demand
Global military spending	$2.887 trillion	Broad rearmament across several regions
Europe	Spending up 14%	Russia, depleted forces and NATO commitments
Asia and Oceania	Spending up 8.1%	China, North Korea and regional deterrence
Middle East	Around $218 billion in spending	Air defense, missiles and regional conflict
Ukraine	9.7% of major-arms imports	Active war and extremely high equipment consumption

Would Europe keep rearming after the Ukraine war?

Europe would keep rearming after the Ukraine war because its military shortages are much larger than the equipment currently being sent to Kyiv.

The European Defence Agency’s latest report puts EU defense expenditure at €418 billion in 2025 and projects €454 billion in 2026. That would take spending from 2.2% to 2.4% of EU GDP within a year.

The composition of that spending is just as important as the total. Defense investment is expected to reach 36% of EU expenditure, while research and development should rise from €17 billion to €20 billion. Governments are buying equipment and technology rather than using the entire increase for wages and daily operations.

National plans are also becoming harder to reverse. Poland has pushed defense expenditure toward levels rarely seen in peacetime Europe. Germany has committed more than €100 billion annually and wants to reach NATO’s 3.5% core-defense target ahead of schedule. The United Kingdom is putting additional money into munitions, nuclear forces and autonomous systems.

These plans cover air defense, combat aircraft, armored vehicles, naval forces, secure communications and ammunition factories. Many will take five, ten or even twenty years to complete.

A ceasefire would probably reduce the sense of emergency. Some programs would be delayed, especially in countries with weak public finances. Europe would still be left with old aircraft, thin ammunition reserves and undersized armies.

Can NATO countries really deliver their new defense promises?

NATO’s new defense promises are credible enough to support growth, although governments will deliver them unevenly.

At the latest NATO summit, members committed to spend 5% of GDP annually on defense and related security by 2035. At least 3.5% must cover core military requirements, with another 1.5% available for infrastructure, resilience, cybersecurity and other security-related investment.

European allies and Canada had already increased defense spending by roughly 20% in real terms during 2025. The new target extends an existing shift rather than starting one from scratch.

The commitment also asks countries to submit annual plans showing how they will reach the target. That gives manufacturers more visibility when deciding whether to hire workers or build factories.

Still, 5% of GDP should not be treated as a guaranteed stream of weapons contracts. Governments can count ports, roads, communications networks and civil-preparedness projects inside the broader category. Elections can change priorities, and heavily indebted countries may stretch programs over longer periods.

The core 3.5% target is the number defense companies should watch. Even partial delivery would leave NATO expenditure well above its old level.

If you want more recent data on this point, please see our latest defense tech market report.

How much defense growth is already locked into company backlogs?

Major defense contractors currently have enough booked work to keep growing through a temporary drop in new Ukraine orders.

Rheinmetall reported a €73 billion backlog after the first quarter of 2026, up from €56 billion a year earlier. The figure includes expected orders under framework agreements and €5.5 billion from the newly consolidated naval business, so it is broader than a conventional order book. It is still more than seven times Rheinmetall’s 2025 sales.

Saab’s latest quarterly results showed an order backlog of SEK318 billion. The company also reported organic sales growth of almost 30% during the quarter. A SEK47 billion Polish submarine order helped push bookings higher, showing how much current demand comes from long-term European programs rather than equipment for Ukraine.

BAE Systems ended 2025 with an £83.6 billion backlog against £30.7 billion of annual sales. Its work covers submarines, combat aircraft, missiles, electronics and support contracts across several countries.

Backlogs can be delayed, resized or cancelled. Companies also need enough engineers, materials and factory capacity to turn orders into revenue. Even with those limits, the numbers explain why a ceasefire would not suddenly send the largest contractors back to their prewar size.

Company	Latest reported backlog	Previous annual sales	Approximate coverage
Rheinmetall	€73 billion	€9.9 billion	More than 7 years
Saab	SEK318 billion	SEK79.1 billion	Around 4 years
BAE Systems	£83.6 billion	£30.7 billion	Around 2.7 years

Would NATO keep rebuilding its weapon stockpiles after Ukraine?

NATO stockpile rebuilding would continue after the Ukraine war because current factories were expanded to repair years of underinvestment, not only to supply the front.

The United States initially received $25.9 billion to replace weapons taken from its own inventories. A Government Accountability Office review found that missiles, ammunition and combat vehicles absorbed most of that money.

The US Army is still working toward production capacity of 100,000 155-millimeter artillery rounds per month. A recently opened Illinois facility can produce another 12,000 projectiles monthly at full capacity. Earlier investments added metal-parts, explosives and assembly sites across several states.

Europe launched a similar expansion. The European Commission funded 31 projects covering shells, explosives, powder, missiles and testing. Its program aimed to bring European shell-production capacity to roughly two million rounds per year.

Those factories can refill national arsenals, supply training, support exports and provide spare capacity for another crisis. Governments have learned how long it takes to restart a closed explosives plant or train skilled ammunition workers.

Demand will eventually cool. Once inventories reach their target levels, manufacturers may struggle to keep every new production line busy. Governments would then need to pay for reserve capacity or accept another round of factory closures.

For the next few years, replenishment still looks unfinished.

Could China replace Ukraine as defense tech’s main growth engine?

China is already the stronger long-term growth engine for American and Asian defense tech, although it creates demand for very different weapons.

SIPRI estimates that China spent around $336 billion on its military in 2025, following another 7.4% increase. China now represents about 12% of global military expenditure.

The latest US national defense strategy places China and the Indo-Pacific near the center of American planning. Japan has also brought forward its objective of reaching a defense-budget level equal to 2% of GDP.

This competition favors long-range missiles, autonomous aircraft, unmanned ships, submarines, satellites, resilient communications and systems that can operate when GPS is blocked. Japan’s current plans include stand-off weapons, layered coastal defense, counter-drone equipment and integrated air defense.

The Middle East adds another source of demand, especially for interceptors, radar and counter-drone systems. Regional arms imports have recently fallen, according to SIPRI, but Saudi Arabia, Qatar, Israel, Kuwait and other buyers continue to fund high-value air-defense and aircraft programs.

Ukraine produces extraordinary demand for short-range drones, artillery and electronic warfare. The Indo-Pacific produces larger, longer and more expensive programs. Defense growth can move away from Ukraine while remaining strong.

Which defense technologies depend most on Ukraine?

Basic tactical drones and fast-changing battlefield equipment currently depend most heavily on the Ukraine war.

Ukraine’s defense industry had capacity to make around 4.5 million FPV drones in 2025. The Ministry of Defence planned to spend more than UAH110 billion on drones that year and delivered millions of FPV systems to military units.

The scale has grown again. During the first half of 2026, Ukraine’s procurement agency signed drone contracts worth UAH333.6 billion. Ukrainian officials also reported that drones were responsible for more than 80% of enemy targets destroyed, showing how central unmanned systems have become to daily combat.

This market behaves very differently from normal military procurement. Drones are bought by the million, lost quickly and modified constantly. Units can now choose among more than 180 FPV models from around 40 manufacturers through Ukraine’s digital procurement marketplace, with average delivery times measured in days.

A ceasefire would remove much of that volume. Dozens of suppliers currently survive because Ukraine needs a wide range of cheap systems immediately. Peacetime armies are unlikely to buy the same quantities or tolerate that many overlapping products.

Companies selling little more than assembled commercial parts would face the hardest correction. Proprietary navigation, autonomy, communications and electronic protection could still attract foreign military buyers.

Defense technology	Dependence on active war in Ukraine	Likely effect of a ceasefire
Basic FPV strike drones	Very high	Orders fall sharply and suppliers consolidate
Tactical electronic warfare	High	Growth slows as battlefield threats change less often
Loitering munitions	High	Initial decline followed by selective export demand
Battlefield software	Medium to high	Funding moves toward products with proven contracts
Counter-drone systems	Medium	Demand continues around bases and infrastructure
Autonomous navigation	Medium	Demand spreads across air, land and maritime systems
Air and missile defense	Low	Strong growth continues
Military space and cyber	Low	Growth remains mostly independent of Ukraine

If you want more recent data on this point, please see our latest defense tech market report.

Which defense technologies would keep growing without Ukraine?

Air defense, military space, cyber systems, submarines and long-range autonomy would keep growing without the Ukraine war.

European governments now want layered protection against drones, cruise missiles and ballistic missiles. Building that protection requires radar, command software, launchers, interceptors and secure communications. A ceasefire would reduce immediate consumption in Ukraine without making Russian missile forces disappear.

Naval and aerospace programs move even more slowly. Poland’s latest submarine order from Saab is worth SEK47 billion. The United Kingdom and its partners are funding another stage of their future combat-aircraft program through a £4.6 billion contract. Australia, the United States and the United Kingdom are working on submarine capabilities that will run for decades.

Military space has also become a separate priority. Armed forces depend on commercial and government satellites for communications, navigation, intelligence and targeting. NATO now has a dedicated commercial-space strategy, while national governments are funding more resilient constellations.

Cyber defense already operates every day, during war and peace. Military networks, ports, power systems and government agencies remain targets even when conventional fighting stops.

These markets sell lasting capabilities across several regions. Their growth does not require thousands of products to be destroyed every week.

Would defense startups lose their best testing ground?

Defense startups would lose their most useful real-world testing ground if the Ukraine war ended.

Ukraine currently shows whether a drone can survive jamming, whether software remains useful during an attack and whether navigation works without a reliable satellite connection. Engineers can receive feedback from soldiers and change a product within days.

That process has exposed companies whose products looked impressive at demonstrations but failed under pressure. It has also helped stronger suppliers build evidence that would normally take years to collect.

Ukraine could preserve part of this advantage after a ceasefire. Its military would retain experienced operators, testing ranges and a large domestic defense industry. Joint-production agreements are already moving Ukrainian manufacturing into countries such as Germany. Ukraine could become an exporter and testing partner for NATO.

Military exercises cannot fully recreate an enemy that is constantly trying to jam, deceive and destroy the product. Development cycles would slow, and startups would find it harder to prove that their systems work outside controlled conditions.

Battlefield-tested companies would probably become more valuable. Everyone else would return to competing through trials, procurement exercises and polished demonstrations.

Can normal military procurement keep defense startups growing?

Normal military procurement can support a smaller group of defense startups, but it cannot replace Ukraine’s wartime speed for the whole sector.

Ukraine can move from a battlefield need to testing and purchasing within days or weeks. Western procurement usually adds formal requirements, cybersecurity reviews, budget approvals, trials, legal checks and lengthy contract negotiations.

The Defense Innovation Unit was created to shorten that process in the United States. Between fiscal years 2016 and 2023, DIU awarded 450 prototype agreements and reported 62 transitions into production agreements or normal government contracts.

Those numbers need context. The 62 transitions equal about 14% of all prototype awards, including projects that had not yet finished. DIU says 51% of completed prototypes reached production. Both figures point to the same problem: a promising test does not automatically become a large recurring order.

Recent US reforms are pushing agencies to use faster contract structures more often. DIU’s current solicitations also put more emphasis on a clear route toward operational deployment.

Startups still need a military program that pays for production. Grants, pilot projects and innovation competitions can keep a company alive for a while, but they rarely create a durable business on their own.

Will venture capital keep funding defense tech without Ukraine?

Venture capital will keep funding defense tech without Ukraine, although investors are already becoming more selective about which companies can reach production.

The latest Dealroom and NATO Innovation Fund study found that European defense, security and resilience startups raised a record $8.7 billion in 2025. That was up from $5.2 billion in 2024 and nearly five times the amount invested six years earlier.

Defense, security and resilience represented roughly 43% of European deep-tech investment. The NATO Innovation Fund, backed by 24 allied countries, is itself deploying more than €1 billion into startups and specialist funds.

The headline total needs careful reading. It includes resilience and security businesses beyond weapons, while a few large late-stage rounds account for a meaningful share of the increase. Early-stage founders do not all have easy access to that money.

Ukraine also made almost every drone, autonomy and battlefield-software pitch sound urgent. Investors could point to an active war, visible equipment losses and constant demand for better systems.

After a ceasefire, contracts will matter more than demonstrations. Funding should concentrate around companies with proprietary technology, proven manufacturing and buyers outside Ukraine. Startups built around one battlefield feature will find the market much colder.

Defense venture capital has moved too far into the mainstream to disappear. The easy-money part of the cycle is more vulnerable.

If you want more recent data on this point, please see our latest defense tech market report.

Could public debt stop Europe’s defense boom?

Public debt could slow Europe’s defense boom, especially in countries that already struggle to fund pensions, healthcare and interest payments.

The latest European spending plans look large on paper. Reaching NATO’s core target of 3.5% of GDP would require many countries to find tens of billions of euros in additional annual expenditure.

Threat perception alone does not decide how much a government spends. European Central Bank research has found that countries with more fiscal space tend to respond more strongly, even when countries face similar security risks.

The difference is already visible. Poland, Germany and the Nordic countries are moving quickly. Governments with higher debt and weaker growth have fewer easy options. They can raise taxes, cut other programs, borrow more or stretch defense purchases over longer periods.

Companies would feel that pressure through delayed contracts and smaller annual deliveries rather than a sudden cancellation of every program. Governments could also count infrastructure and civilian resilience toward NATO’s wider 5% target, leaving less money for actual military equipment.

Fiscal pressure is the clearest reason to expect slower European growth after the current surge. It is unlikely to push spending back to old levels while Russia remains a serious concern.

Could defense spending collapse like it did after the Cold War?

A Cold War-style collapse in defense spending looks unlikely because today’s security threats are spread across several regions and technologies.

SIPRI estimates that global military expenditure fell by an average of around 4.5% per year between 1988 and 1997. Governments could cut deeply because the Soviet Union collapsed, the Warsaw Pact disappeared and the risk of a major European war seemed to fall at the same time.

A Ukraine peace would remove one active war. Russia would keep its armed forces and nuclear arsenal. China would continue expanding in the Indo-Pacific. North Korea would retain its missiles. Cyberattacks, sabotage, drone threats and competition in space would continue during peacetime.

NATO members have also started rebuilding industrial capacity that took years to restore. Closing those factories again would leave governments exposed during the next emergency.

A genuine peace dividend would require a durable settlement with Russia, a quieter Indo-Pacific, less confrontation in the Middle East and enough budget pressure to overcome military concerns. Several things would have to improve together.

The more realistic outcome is a correction inside a market that remains historically large. Ammunition orders could peak. Drone suppliers could disappear. Startup valuations could fall. Large strategic programs would continue.

Will defense tech keep growing without Ukraine?

Yes, defense tech will keep growing without Ukraine, but the market will stop rewarding almost every company that calls itself defense tech.

Global military expenditure is already close to $2.9 trillion. Europe is still raising budgets and rebuilding forces. NATO has adopted a much higher long-term spending target. Asia is rearming around China and North Korea. Large contractors have years of booked work.

Those foundations look strong enough to survive a ceasefire.

Ukraine-dependent products face a harsher future. Millions of cheap drones would no longer be consumed at the same speed. Battlefield software would lose its fastest testing cycle. Investors would stop assuming that every useful military feature can become a large standalone company.

The winners would sell technology that remains valuable across several threats and regions: air defense, secure communications, autonomous navigation, military space, cyber systems, undersea platforms and long-range weapons. Companies with real contracts and production capacity would pull further ahead.

Defense tech would keep growing, although at a slower rate and with far more consolidation. Ukraine launched the sector’s most intense growth phase. The larger rearmament cycle can continue without it.

Part of the defense-tech market	Likely outcome without active war in Ukraine
Global military spending	Keeps rising, but at a slower pace
European rearmament	Continues because major capability gaps remain
Large defense contractors	Protected by long programs and large backlogs
Air defense, space, cyber and maritime systems	Remain strong growth areas
Basic tactical-drone companies	Face falling demand and consolidation
Startups with proprietary battlefield-tested technology	Retain strategic value
Startups dependent on pilots and grants	Struggle to raise capital or reach production
Overall defense-tech market	Becomes less speculative, more concentrated and still larger than before Ukraine

If you want more recent data on this point, please see our latest defense tech market report.

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