SAMI exec on Saudi Arabian localization push, Turkish deal prospects and future plans

Nov 21, 2023

Breaking Defense:

A top executive for Saudi Arabia’s state-owned defense conglomerate told Breaking Defense that the kingdom has managed to localize about 15 percent of its defense production so far, in what he says will be a springboard for hitting the nation’s goal of 50 percent localization by 2030.

For instance, Walid Abukhaled, CEO of Saudi Arabia Military Industries (SAMI), pointed to a recent deal with Turkey’s Baykar Technology to first directly purchase the company’s Bayraktar Akinci drones, but then domestically produce them in the kingdom beginning in 2026.

Abukhaled sat down with Breaking Defense during the Dubai Airshow to discuss SAMI’s wider localization efforts, prospective cooperation agreements, and the organization’s plans for the upcoming second edition of World Defense Show that will take place in Saudi Arabia in February 2026.

This interview has been edited for length and clarity.

BREAKING DEFENSE: SAMI has been treading steadily in localization efforts, what is the exact defense localization percentage at this point? Are you confident to reach 50 percent defense localization in 2030?

WALID ABUKHALED: We all know the mandate is localizing 50 percent of the defense spending by 2030, and SAMI is playing a crucial part and vital role in delivering this mandate to the kingdom. So far, we’ve declared before that we have won many contracts. Our backlog is about 10 billion [Riyals]. Beyond all the contracts we’ve won, our formal commitment on average is about 50 percent localization. Some of those contracts will be delivered next year. Some of them will be delivered in three years, but overall, on average, with the commitment is about 50 percent.

The kingdom now has reached about 15 percent localization, the mandate is still to achieve 50 percent by 2030. But the process is not a straight line progress. When the capability is built, and with initial couple of years investing in facilities, and training people, then the process becomes a lot faster to achieve the mandate of localizing 50 percent of the defense. It moves in an exponential curve, and it looks challenging to reach the mandate, but I’m confident that we should achieve this mandate, with government, armed forces and GAMI [General Authority for Military Industries] support.

Speaking about cooperation with Turkey, can you tell us more about the timeline for the Bayktar Akinci? And what systems will be produced in KSA? Other than drones, what catches SAMI’s eyes from Turkish defense industries for future cooperation?

The Ministry of Defense announced about four months ago the big contract with the Turkish company Baykar [that] has a big element of localization. The SAMI contract with Baykar is to localize the full production of the unmanned aircraft in the Kingdom of Saudi Arabia. There’s an initial number [of Akinci UAVs] that will be received directly from Turkey initially, but then all the remaining [UAVs] of the contract will be all done in SAMI facilities. So the airframe of the aircraft harnesses, cabling, integration, and the full build up of the aircraft will be done in our facilities in KSA. We are  expecting local production in about the beginning of 2026.

The kingdom looks at capability first, through life support cost, how much it goes to support and how much the OEM [original equipment manufacturer] is willing to localize in the Kingdom of Saudi Arabia. Based on these criteria, the decision is made. Turkey is very good when it comes to land systems, air defense and UAVs.

We explore many opportunities, not only with Turkey, but with really all our partners or our allies, as we work with them closely to look at the best opportunities we can find.

After Hazem, the first Saudi combat management system, what defense systems are you developing with Saudi branding?

We are working continuously since our vision and mission states that have to develop state of the art technologies in the defense industry. We need to localize at least 50 percent of the defense spending, so we are investing in developing our own products across all domains, but the key ones now are really AI and command and control systems.

We’re looking UAVs, too, and land systems. It’s across the profile of SAMI’s capabilities.

Recently SAMI acquired Aircraft Accessories and Components and rebranded it as SAMI Aerospace Mechanics. What is the strategy for this subsidiary and the aircraft maintenance by SAMI generally?

The Aircraft Accessories and Components is a mechanical components and hydraulics component for aerospace specialist. What we’ve done since acquiring it is that we’ve invested in developing new capabilities. We brought the best OEMs in the world to provide the right licensing qualification certifications. Now we believe the company is going to be as good as SAMI Advanced Electronics, a genuinely regional leader when it comes to aerospace mechanics.

Our focus in this company now is maintenance, repair and overhaul.

Three months from now the second edition of the World Defense Show will take place. What are your plans for WDS 2024?

SAMI is the strategic partner at WDS 2024. It’s one of the largest shows I would say globally. It’s a place where almost every single OEM globally in the defense industry is present.

The Saudi market has proven to be one of the most lucrative and attractive market when it comes to defense, industry and other industries.

We will show capabilities across key sectors: aerospace, land systems, advanced electronics including like radars, sensors.

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