The numbers tell a compelling story, but context reveals the transformation. While your original article correctly identified 109 new defence-related businesses entering the Swedish market between 2024 and 2025, and noted historically high export values of SEK 28 billion in 2025, the broader narrative requires correction and deeper analysis. The Stockholm International Peace Research Institute (SIPRI) data referenced regarding “2021-2015” appears to contain a typographical error; their latest March 2025 fact sheet indicates that global arms transfers remained relatively stable between 2015-2019 and 2020-24, with European imports surging 155% while other regions saw declines.
The NATO Inflection Point
Sweden’s March 2024 NATO accession represents the most significant strategic shift for the domestic defence industry since the Cold War. This transition from 200 years of military non-alignment has fundamentally altered market access, procurement frameworks, and investor perception. As Madelene Rydén, Director of Defence at the Swedish Security & Defence Industry Association (SOFF), observes: “The perception of defence has changed, in society, in banking and among investors. Defence is increasingly seen as a part of sustainability today, something that contributes to stability and security”.
This perception shift translates into measurable growth. Between 2023 and 2024, the Swedish defence and security industry expanded by 55%, reaching SEK 100 billion in total turnover. The ecosystem now encompasses approximately 450 licensed entities—more than double the 2018 figure—though this expansion includes supply chain subcontractors newly required to hold manufacturing licenses.
Structural Growth Drivers
Several interconnected factors are accelerating industry expansion:
1. Historic Defence Budget Expansion
Sweden’s defence appropriations have doubled since 2022, reaching SEK 148 billion for 2025. The 2026 budget proposal adds SEK 26.6 billion—an 18% year-over-year increase representing the largest defence investment since the Cold War. By NATO definitions, defence expenditure will reach 2.8% of GDP in 2026, with projections of 3.1% by 2028. The materiel procurement framework has expanded from SEK 92 billion (2022) to SEK 272 billion (2025).
2. The Dual-Use Technology Surge
Sweden’s defence innovation strategy increasingly leverages civilian technological leadership for military applications. The government’s civil-military innovation programme, funding doubled to SEK 120 million annually starting 2025, targets artificial intelligence, autonomous systems, quantum technology, and advanced connectivity. Vinnova and the Swedish Armed Forces are actively funding startups transitioning civilian technologies—such as drone systems, sensor platforms, and cybersecurity solutions—into defence applications.
3. Export Market Diversification
Swedish defence exports, while historically concentrated in European markets, are expanding globally. The United States represents a particularly high-potential market, with Saab already delivering Giraffe radar systems to the US Air Force and Navy, and securing a SEK 4.7 billion AT4 weapons system contract with the US Army. Canada, Poland, Germany, and Asian markets with rapidly expanding military budgets present additional opportunities. Notably, Ukraine has expressed intent to procure over 150 Gripen E fighter jets—a potential landmark deal for Saab.
Industry Structure and Competitive Positioning
Sweden maintains one of NATO’s most capable indigenous defence industrial bases. Saab dominates as the national champion, with 58% of revenues derived from exports. However, the sector’s strength extends beyond the prime contractor. Approximately 80 Swedish companies export advanced munitions, combat vehicles, naval vessels, software, and surveillance systems.
The sector demonstrates particular strength in:
– Combat Aircraft: Gripen E/F production for Sweden and Brazil, with Hungary and Thailand pursuing additional orders
– Ground-Based Air Defence: Giraffe radar family and command-and-control systems, with recent SEK 2.1 billion brigade air defence contracts from FMV
– Precision Weapons: Carl-Gustaf, NLAW, and AT4 systems, with production scaling through international partnerships including India and Poland
– Undersea Systems: A26 submarine construction and autonomous underwater vehicle development at Kockums
– Airborne Early Warning: GlobalEye platform, with three units ordered by Sweden and export prospects for NATO’s future surveillance needs
Emerging Trends: Startups and Investment
The Swedish defence-tech ecosystem, while nascent compared to software or fintech, is attracting unprecedented capital and talent. Nordic Air Defence (NAD), developing drone interceptor technology, raised €4.4 million in pre-seed funding—the largest publicly disclosed Swedish defence-tech raise to date—with former Foreign Minister Tobias Billström joining as Director of Strategy. ECAPS, developing dual-use propulsion systems for satellites, secured €20 million in EIB venture debt financing.
This startup activity reflects broader European trends but with Swedish distinctiveness: deep engineering expertise, dual-use technology focus, and increasing integration with NATO procurement frameworks. The Export Credit Agency (EKN) has adapted its financing instruments to support smaller companies entering security-sensitive markets, as demonstrated by drone manufacturer Airolit’s expansion.
Strategic Challenges and Considerations
Despite positive momentum, several structural challenges require attention:
Industrial Capacity Constraints: Global demand for munitions and platforms exceeds current production capabilities. Saab’s Dynamics division is scaling manufacturing through international partnerships, but lead times for critical systems remain extended.
Next-Generation Combat Aircraft Uncertainty: Sweden risks technological isolation in sixth-generation fighter development. While Saab secured SEK 2.6 billion for continued conceptual studies (2025-2027) , the country has not formally joined the Franco-German FCAS or UK-led GCAP programmes. This “hibernation” status regarding multinational next-generation development could limit future workshare opportunities.
Export Policy Complexity: Sweden maintains restrictive arms export guidelines, though NATO membership has prompted recalibration. The ISP denied only two export licenses in 2024 (Thailand and Türkiye), but applications to sensitive markets face heightened scrutiny.
Investment Outlook
For Nordic Business Journal readers, the Swedish defence sector presents several actionable considerations:
– Supply Chain Opportunities: The requirement for licensed subcontractors creates entry points for precision manufacturing, electronics, and software providers
– Dual-Use Technology Transfer: Civilian AI, cybersecurity, and sensor companies can access defence funding through Vinnova’s innovation programmes
– Transatlantic Bridge: Sweden’s NATO membership facilitates Swedish-American industrial partnerships, particularly in research and development
– Sustainability Integration: Environmental, social, and governance (ESG) frameworks increasingly accommodate defence investment when linked to collective security objectives
Sweden’s defence industry has transitioned from a national self-sufficiency project to an integrated NATO capability provider. The 109 new market entrants and SEK 28 billion export performance reflect not merely quantitative growth, but qualitative transformation in strategic positioning, technological focus, and international alignment. With defence budgets set to expand through 2030 and innovation programmes accelerating civil-military technology transfer, the sector offers sustained opportunities for established players and emerging entrants alike.
What to Watch Next
For our upcoming Q2 coverage, Nordic Business Journal will examine the Nordic Defence Cooperation (NORDEFCO) framework under Finnish chairmanship in 2025, analysing how joint procurement initiatives among Denmark, Finland, Norway, and Sweden are creating economies of scale for regional suppliers. We will also profile the specific investment mechanisms—venture debt, export credit, and direct procurement—available to scaleups entering the defence-security nexus.
Connect with Nordic Business Journal
Follow our defence industry coverage at nordicbusinessjournal.com/defence or connect with our editorial team on LinkedIn for briefing invitations and sector-specific analysis. For partnership inquiries regarding this editorial series, contact defence@nordicbusinessjournal.com.
Sources: Swedish Security & Defence Industry Association (SOFF), Stockholm International Peace Research Institute (SIPRI), Swedish Defence Materiel Administration (FMV), Inspectorate of Strategic Products (ISP), Business Sweden, Vinnova, Saab AB, and Swedish Ministry of Defence official reports, 2024-2025.