Defense Market Booms as Startups and Giants Vie for Underwater Contracts

Defense companies and start-ups are intensifying their competition for a rapidly expanding market driven by a new multibillion-dollar surge in government spending on underwater defense. This emerging sector has drawn attention from both established defense contractors and innovative technology firms, as governments globally prioritize maritime and seabed security amid rising geopolitical tensions [1]. Nations are shifting strategies to protect undersea pipelines, cables, and shipping routes, leading to a reevaluation of traditional naval capabilities [1].

Canada’s recent move to shortlist two major contenders for a large submarine procurement project reflects this trend. The country has selected Germany’s Thyssenkrupp Marine Systems (TKMS) and South Korea’s Hanwha Ocean as top bidders for a multibillion-dollar contract to supply submarines. This decision underscores the global competition among defense manufacturers to secure high-value government contracts aimed at strengthening naval capabilities [1].

In parallel, technology start-ups specializing in maritime and underwater systems are also positioning themselves to capture a share of this expanding market. The defense sector is witnessing a shift as governments seek advanced, agile solutions for underwater surveillance, communication, and defense infrastructure. This has opened the door for smaller firms with cutting-edge technologies to compete alongside traditional defense giants [2].

The United States has already tightened subsea cable regulations through the Federal Communications Commission, while the United Kingdom highlighted maritime security as a core priority in its latest strategic review. Analysts have warned that traditional anti-submarine methods, which are reliant on patrol aircraft and frigates, are increasingly costly and insufficient in addressing the threat [1].

NATO’s “Digital Ocean Vision” is a central initiative aimed at integrating satellites, autonomous systems, and advanced analytics to strengthen surveillance and decision-making across the sea, above and below the surface. This initiative reflects a broader push toward technological modernization in undersea defense [1].

Europe’s largest shipbuilder, Fincantieri, expects the global defense and commercial underwater market to grow to €50B annually, predicting its own underwater division will double in size to €820M by 2027. The scale of the challenge has created opportunities for defense companies and emerging technology groups [1].

MSubs recently developed Excalibur, a 12-meter-long uncrewed submarine undergoing trials with the Royal Navy. The vessel is designed to accelerate the adoption of advanced autonomous technologies at sea. Similarly, BAE Systems has unveiled Herne, a modular autonomous underwater vehicle offering extended range and endurance. “You can’t have a bad day. The systems have to be resilient and work when needed,” Dave Quick, the head of underwater weapons at BAE, said [1].

Helsing, a European defense technology company, is building a factory in Plymouth to produce its SG-1 Fathom autonomous gliders. They are designed to be monitored by a single operator at a fraction of the cost of manned patrols. The AI-powered gliders will form part of a collaborative project with Blue Ocean Marine Tech Systems, Ocean Infinity, and defense group Qinetiq. The company aims to deploy the system within 12 months [1].

The U.S.-based Anduril is also expanding in the UK. Its British subsidiary has partnered with Sonardyne and Ultra Maritime to launch Seabed Sentry, a real-time autonomous sensing system that deploys low-cost “sensor nodes” across the seabed. When combined with Ultra’s Sea Spear sonar system, the network acts as a digital tripwire to detect hostile underwater activity [1].

Thales, which has long provided sonar systems for the Royal Navy, is pursuing Project Cabot. This initiative combines crewed and uncrewed vehicles for anti-submarine warfare. According to Thales executive Ian McFarlane, the project is not only about sensors but also about managing vast amounts of data. “The aim is as much about handling the data that is collected through sensors and other means as well as transferring it into usable information and presenting it in such a way that people understand what they are looking at” [1].

As the sector grows, governments are expected to continue investing heavily in underwater defense capabilities. This spending is likely to accelerate as global defense budgets expand and new security challenges emerge. The involvement of both large defense companies and start-ups indicates a dynamic and competitive market that is set to reshape the underwater defense landscape in the coming years [1].

Source:

[1] title1: Canada selects TKMS and Hanwha Ocean as top bidders for multibillion-dollar submarine contract (url1: https://defence-industry.eu/canada-selects-tkms-and-hanwha-ocean-as-top-bidders-for-multibillion-dollar-submarine-contract/)

[2] title2: Aadil Brar (@aadilbrar) / X (url2: https://x.com/aadilbrar?lang=en)