Securing the Future: Why the Kongsberg-Thales Joint Venture is a Defense Tech Play for the Decade

The world is entering an era of heightened geopolitical tension, with defense spending surging across Europe and beyond. Nowhere is this clearer than in the NATO alliance, where member states are racing to modernize military capabilities amid rising threats. Against this backdrop, the 2024 merger between Kongsberg Defence & Aerospace and Thales to form a joint venture focused on secure defense communications represents a strategic masterstroke. By combining Kongsberg's tactical expertise with Thales' cryptographic prowess, this venture is poised to dominate a $200 billion global market for secure military communications—while offering investors a compelling lever to bet on geopolitical risk and digital sovereignty demands.

The Strategic Synergy: A Match Made in Defense Tech Heaven

The joint venture merges two complementary strengths:
1. Kongsberg's tactical edge: Its tactical radio systems (e.g., NASAMS air defense networks) and land combat communications provide the backbone for real-time battlefield coordination.
2. Thales' cryptographic excellence: Its high-grade encryption and secure voice/data networks ensure interoperability for NATO forces while safeguarding against cyber threats.

The result is a full-stack solution for modern militaries: from secure voice radios in combat vehicles to encrypted command networks for air defense systems. This integration is critical as NATO seeks to harmonize its 30+ member nations' equipment, reducing reliance on U.S.-centric systems.

Revenue Growth: Doubling Down to NOK 3 Billion by 2030

The venture's 2024 revenue of NOK 1.5 billion (€130 million) is just the starting point. With a 50/50 ownership structure and shared R&D investments, synergies will drive a doubling of revenues to NOK 3 billion by 2030. Key growth levers include:
- NATO's 5% GDP spending push: European defense budgets are projected to grow at 4–5% annually, with Norway alone targeting NOK 100 billion in defense spending by 2030.
- Thales' global reach: Its distribution network in 56 countries opens doors to markets like the Middle East and Asia, where digital sovereignty is a priority.
- Kongsberg's order backlog: A record NOK 100 billion pipeline (driven by NASAMS and missile systems) ensures steady demand for integrated communications solutions.

Geopolitical Tailwinds: Digital Sovereignty as a Profit Engine

The venture's emphasis on sovereign technology—systems designed and produced within Europe to avoid reliance on U.S. or Chinese tech—is a direct hit on EU and NATO priorities. This is underscored by initiatives like the EU's ReArm Europe plan, which allocates €800 billion to fund local defense production. Key advantages include:
- Interoperability: Their systems ensure seamless communication between allied forces, a critical gap in current NATO operations.
- Cyber resilience: Thales' quantum-resistant encryption and AI-driven threat detection address rising cyber risks.
- Supply chain resilience: Partnerships with European firms like thyssenkrupp and Hatteland ensure component production stays within the bloc.

For investors, this is a play on structural trends, not fleeting headlines. The market for secure defense communications is expected to grow at 7–9% CAGR through 2030, driven by demand for 5G-enabled battlefield networks and AI-driven command systems.

Risks and Investment Thesis

No investment is risk-free. Key concerns include:
- Regulatory approvals: The venture still awaits clearance in several markets, though both firms have a history of smooth integration (e.g., their 30-year partnership on C4I systems).
- Execution risks: Scaling a joint venture requires seamless coordination; Kongsberg and Thales' shared R&D and €4B+ annual R&D budgets mitigate this.

For investors, Kongsberg (KOG) and Thales (HO) are the primary entry points. Both stocks have underperformed broader markets in 2025 due to macroeconomic volatility, but their valuations now offer an attractive entry.

Conclusion: A Decade-Long Play on Defense Tech

The Kongsberg-Thales joint venture is far more than a merger—it's a strategic pivot to dominate the $200 billion secure defense communications market. With NATO's spending surge, EU's digital sovereignty push, and rising geopolitical tensions, this venture sits at the intersection of three unstoppable forces: technology, geopolitics, and fiscal firepower.

For investors, this is a long-term structural play. While near-term risks exist, the secular tailwinds are undeniable. Allocate a portion of your portfolio to Kongsberg and Thales—this is how you profit from the new world order of defense tech.

Investor takeaway: Consider overweighting Kongsberg (KOG) and Thales (HO) for exposure to secure defense communications, with a 3–5 year holding horizon.