Raytheon's Strategic Gambit in Europe: Strengthening Industrial Resilience Through Defense Technology Outsourcing

A map of Europe highlighting key defense partnerships between Raytheon and European firms, including Norway's Kongsberg, Germany's Diehl Defence, and MBDA, illustrating the company's strategic footprint in the region.

The European defense sector is undergoing a seismic shift. Geopolitical tensions, particularly Russia's invasion of Ukraine, have accelerated the continent's push for defense sovereignty. At the heart of this transformation is Raytheon Technologies Corporation (RTX), which has positioned itself as a linchpin in Europe's quest to build a resilient industrial base. By outsourcing critical defense technologies to European partners and aligning with EU initiatives, Raytheon is not only securing its market share but also addressing the continent's vulnerabilities in supply chains and technological self-reliance.

Strategic Partnerships: A Blueprint for Resilience

Raytheon's approach to the European market hinges on deepening partnerships with local manufacturers. At the 2025 Paris Air Show, the company extended its decade-long collaboration with Norway's Kongsberg to co-produce the NASAMS air-defense system, a move that underscores its commitment to embedding itself in Europe's industrial ecosystem, according to a Defense News report. Similarly, Raytheon signed a memorandum of understanding with Germany's Diehl Defence to co-produce the Stinger short-range anti-air missile, with plans to boost production by 50% by 2026 to meet surging demand from NATO allies, according to Defence Blog. These partnerships are not mere transactions; they are strategic investments in local capabilities, ensuring that critical systems are produced closer to the front lines of Europe's defense needs.

The company's collaboration with MBDA to manufacture the GEM-T interceptor for the Patriot system further exemplifies this strategy. By leveraging European suppliers, Raytheon is reducing bottlenecks in production and aligning with the EU's ReArm Europe Plan, which aims to redirect over €800 billion in defense spending toward local industries, according to a Fortune report. This alignment is critical, as European defense leaders increasingly view self-sufficiency as a matter of survival rather than convenience.

Navigating Supply Chain Vulnerabilities

Europe's reliance on external suppliers-particularly China-for rare earth elements, microchips, and other critical components has exposed its defense sector to geopolitical risks. China refines 87% of the world's rare earths, a material essential for advanced defense technologies, according to a Seraph analysis. Raytheon's strategy to localize production in Europe mitigates these risks by diversifying supply chains and reducing exposure to potential disruptions. For instance, the GhostEye radar for the NASAMS system, co-developed with Kongsberg, is being produced using European suppliers, a shift that the Defense News report says enhances transparency and security.

However, challenges persist. The EU's Security Action for Europe (SAFE) instrument, a €150 billion initiative, highlights the urgency of building a self-sufficient defense industrial base, as the Seraph analysis also emphasizes. Raytheon's partnerships are a step in this direction, but they must contend with the broader reality of global supply chain interdependencies. The company's emphasis on local manufacturing, however, positions it as a key player in a sector where resilience is now a non-negotiable requirement.

Investment Implications: A Win-Win for Raytheon and Europe

For investors, Raytheon's European strategy represents a calculated bet on long-term growth. The company's 24,000-strong European workforce and its alignment with EU policies suggest a durable presence in a market projected to expand significantly, a point highlighted in the Defense News report. By outsourcing production to European partners, Raytheon is not only reducing costs but also enhancing its credibility with NATO allies who prioritize transatlantic cooperation.

Yet, risks remain. Geopolitical tensions could disrupt cross-border collaborations, and the EU's push for sovereignty might lead to protectionist policies. However, Raytheon's proactive approach-such as its joint ventures and supply chain diversification-positions it to weather these challenges. The company's ability to adapt to Europe's evolving defense landscape, while maintaining its technological edge, makes it a compelling investment in a sector defined by urgency and transformation.

A bar chart comparing Raytheon's European defense revenue growth (2023–2025) against the EU's defense spending under the ReArm Europe Plan, highlighting the correlation between local partnerships and market expansion.