Future of the Chilean Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022

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Published: December 26, 2017 Report Code: GD-DF0458MR-ST

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The Future of the Chilean Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defense Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the Chilean defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following –
– The Chilean defense industry market size and drivers: detailed analysis of the Chilean defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
– Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country
– Porter’s Five Force analysis of the Chilean defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
– Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
– Market opportunities: details of the top five defense investment opportunities over the next 10 years
– Competitive landscape and strategic insights: analysis of the competitive landscape of the Chilean defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

– The Chilean defense budget values US$2.6 billion in 2017 and registered a CAGR of 0.24% during the historic period 2013-2017.

– The country’s maritime border dispute with Peru and Bolivia and active participation in international peacekeeping missions, along with its plans to equip its forces with advanced equipment, technology, command systems, and adequate training to ensure improved capabilities are anticipated to drive demand for robust defense expenditure over the forecast period.

– However, with the country winding down its peacekeeping contingent in Haiti, its overseas engagements are also expected to diminish, thus negating the need to maintain high defense spending.

Reasons to Buy

– This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Chilean defense industry market trends for the coming five years

– The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period

– Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector

– A deep qualitative analysis of the Chilean defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

FAMAE
Desarrollo de Tecnologias y Sistemas
Linktronic Radar Systems
SISDEF Ltda

Table of Contents

Table of Contents

1. Introduction 7

1.1. What is this Report About? 7

1.2. Definitions 7

1.3. Summary Methodology 9

1.4. About Strategic Defense Intelligence 10

2. Executive Summary 11

3. Market Attractiveness and Emerging Opportunities 13

3.1. Current Market Scenario 14

3.1.1. Primary Threat Perception 14

3.1.2. Military Doctrine & Strategy 15

3.1.3. Military Fleet Size 16

3.1.4. Procurement Programs 20

3.1.5. Social, Political and Economic Environment and Support for Defense Projects 22

3.1.6. Political and Strategic Alliances 23

3.2. Defense Market Size Historical and Forecast 24

3.2.1. Chilean defense expenditure to be US$15.2 billion cumulatively over the forecast period 24

3.2.2. Border disputes and military modernization to drive defense expenditure 26

3.2.3. Defense expenditure as a percentage of GDP is anticipated to decline over the forecast period 28

3.3. Analysis of Defense Budget Allocations 30

3.3.1. Capital expenditure allocation expected to increase over the forecast period 30

3.3.2. Capital expenditure expected to decrease over the forecast period 32

3.3.3. The army is expected to receive the highest allocation over the forecast period 34

3.3.4. Army expenditure to rise over the forecast period 36

3.3.5. Per-capita defense expenditure expected to increase over the forecast period 40

3.4. Homeland Security Market Size and Forecast 41

3.4.1. Homeland Security market in Chile expected to grow at a CAGR of

7.19% during the forecast period 41

3.4.2. Drug trafficking, natural disasters, and threats from the Mapuche community to drive the homeland security budget 44

3.4.3. Chile considered at ‘moderate risk’ of a terrorist attack 46

3.4.4. Chile experienced moderate terror activity during the historic period 47

3.4.5. Chile has a terrorism index score of

2.7 49

3.5. Benchmarking with Key Global Markets 50

3.5.1. Chilean defense budget expected to register consistent growth over the forecast period 50

3.5.2. Chilean military expenditure is expected to remain low compared to other leading spenders 52

3.5.3. Defense budget as a percentage of GDP expected to remain low on a global scale 53

3.6. Market Opportunities: Key Trends and Growth Stimulators 54

3.6.1. Transport Aircraft 54

3.6.2. Surface-Air Missiles 55

3.6.3. Military IT – Networking 56

4. Defense Procurement Market Dynamics 57

4.1. Import Market Dynamics 58

4.1.1. Defense imports maintained large volumes during the historic period 58

4.1.2. The US accounts for most Chilean defense imports 59

4.1.3. Missiles, sensors and aircraft are the largest imported military hardware 60

4.2. Export Market Dynamics 61

4.2.1. Aircraft are the main exported defense products 61

5. Industry Dynamics 62

5.1. Five Forces Analysis 62

5.1.1. Bargaining Power of Supplier: Medium 63

5.1.2. Bargaining Power of Buyer: Low 63

5.1.3. Barrier to Entry: Low 63

5.1.4. Intensity of Rivalry: Low to Medium 63

5.1.5. Threat of Substitution: High 63

6. Market Entry Strategy 64

6.1. Market Regulation 64

6.1.1. Offset policy aids the development of the domestic defense industry 64

6.1.2. Foreign direct investment in the defense sector is restricted 64

6.2. Market Entry Route 65

6.2.1. Budgeting Process 65

6.2.2. Procurement Policy and Process 65

6.2.3. The country’s biennial defense exhibition provides an attractive entry route 65

6.2.4. Joint ventures and collaborations provide market entry opportunities 66

6.2.5. Foreign equipment manufacturers enter the market through direct commercial sales 66

6.3. Key Challenges 67

6.3.1. Changes in the economic environment 67

7. Competitive Landscape and Strategic Insights 68

7.1. Competitive Landscape Overview 68

7.2. Key Domestic Companies 69

7.2.1. FAMAE: Overview 69

7.2.2. FAMAE: Products and Services 69

7.2.3. FAMAE: Recent Announcements and Strategic Initiatives 69

7.2.4. FAMAE: Alliances 70

7.2.5. FAMAE: Recent Contract Wins 71

7.2.6. Desarrollo de Tecnologias y Sistemas (DTS): Overview 71

7.2.7. Desarrollo de Tecnologias y Sistemas (DTS): Products and Services 71

7.2.8. Desarrollo de Tecnologias y Sistemas (DTS): Recent Announcements and Strategic Initiatives 72

7.2.9. Desarrollo de Tecnologias y Sistemas (DTS): Alliances 72

7.2.10. Linktronic Radar Systems: Overview 72

7.2.11. Linktronic Radar Systems: Products 72

7.2.12. SISDEF Ltda: Overview 73

7.2.13. SISDEF Ltda: Products 73

7.2.14. SISDEF Ltda: Recent Announcements and Strategic Initiatives 74

7.2.15. SISDEF Ltda: Recent Contract Wins 74

8. Business Environment and Country Risk 75

8.1. Economic Performance 75

8.1.1. GDP Per Capita 75

8.1.2. GDP, Current Prices, US$ Billion 76

8.1.3. Local Currency Unit per US$ 77

8.1.4. Market Capitalization of Listed Companies 78

8.1.5. Market Capitalization of Listed Companies (% of GDP) 79

8.1.6. Exports of Goods & Services (LCU Billion) 80

8.1.7. Imports of Goods and Services (LCU Billion) 81

8.1.8. Goods Exports as a Percentage of GDP 82

8.1.9. Goods Imports as a Percentage % of GDP 83

8.1.10. Gross National Disposable Income (USD Billion) 84

8.1.11. Service Imports as a Percentage of GDP 85

8.1.12. Service Exports as a Percentage of GDP 86

8.1.13. Foreign Direct Investment 87

8.1.14. Net Foreign Direct Investment as a Percentage of GDP 88

8.1.15. Government Cash Surplus/Deficit as a Percentage of GDP (LCU) 89

8.1.16. Mining, Manufacturing, Utilities Output 90

9. Appendix 91

9.1. About SDI 91

9.2. Disclaimer 91

Table

List of Tables

Table 1: Chile Ground Forces Strength 16

Table 2: Chile Navy Strength 18

Table 3: Chile Air Force Strength 19

Table 4: Chile – Ongoing Development and Procurement Programs 20

Table 5: Chile – Future Procurement Programs 21

Table 6: Chilean Defense Expenditure (CLP$ billion & US$ billion), 2013-2022 24

Table 7: Chilean GDP Growth and Defense Expenditure as a Percentage of GDP, 2013-2022 28

Table 8: Chilean Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 30

Table 9: Chilean Defense Capital Expenditure (CLP$ Billion & US$ Million), 2013-2022 32

Table 10: Chilean Defense Budget Share (%) Split by Services (Army, Navy, Air Force and Other), 2013-2022 34

Table 11: Chile Defense Budget Allocations in EUR Million – Breakdown by Services (Army, Air Force, Navy and Others) 2013-2022 36

Table 12: Chilean Defense Budget in US$ Million – Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022 38

Table 13: Chilean Per-Capita Defense Expenditure (US$), 2013-2022 40

Table 14: Chilean Homeland Security Expenditure (CLP$ trillion & US$ billion), 2013-2022 42

Table 15: Terrorism Index, 2017 47

Table 16: Benchmarking with Key Markets – 2013-2017 vs. 2018-2022 50

Table 17: Chile Budget Formation Timetable 65

Table 18: Competitive Landscape of the Chilean Defense Industry 68

Table 19: FAMAE – Product Focus 69

Table 20: FAMAE – Alliances 70

Table 21: FAMAE: Recent Contract Wins 71

Table 22: Desarrollo de Tecnologias y Sistemas (DTS) – Product Focus 71

Table 23: Desarrollo de Tecnologias y Sistemas (DTS) – Alliances 72

Table 24: Linktronic Radar Systems – Product Focus 72

Table 25: SISDEF Ltda – Product Focus 73

Table 26: SISDEF Ltda – Recent Contract Wins 74

Figures

List of Figures

Figure 1: Chilean Defense Expenditure (CLP$ Trillion), 2013-2022 25

Figure 2: Chilean Defense Expenditure (US$ Billion), 2013-2022 25

Figure 3: Chilean GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2012-2022 29

Figure 4: Chilean Defense Expenditure Allocation for Capital and Revenue Expenditure (%), 2013-2022 31

Figure 5: Chilean Defense Capital Expenditure (CLP$ Billion), 2013-2022 33

Figure 6: Chilean Defense Capital Expenditure (US$ Million), 2013-2022 33

Figure 7: Chilean Defense Expenditure Split Between Army, Navy, Air Force and Others (%), 2013-2022 35

Figure 8: Chilean Defense Expenditure in (CLP$ Million), – Breakdown by Services (Army, Air Force, Navy and Others) 2013-2022 37

Figure 9: Chilean Defense Budget in US$ Million – Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022 39

Figure 10: Chilean Per-Capita Defense Expenditure (US$), 2013-2022 40

Figure 11: Chilean Homeland Security Budget (CLP$ Trillion), 2013-2022 42

Figure 12: Chilean Homeland Security Budget (US$ Billion), 2013-2022 43

Figure 13: Terrorism Heat Map, 2017 46

Figure 14: Terrorism Index, 2017 49

Figure 15: Benchmarking with Key Global Markets: 2013-2017 vs. 2018-2022 51

Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022 52

Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 53

Figure 18: Transport Aircraft Market Size (US$ Million), 2017-2020 54

Figure 19 Surface-Air Missiles Market Size (US$ Million), 2017-2027 55

Figure 20: Chilean Military IT – Networking Market Size (US$ Million), 2017-2027 56

Figure 21: Chilean Defense Imports (US$ Million), 2012-2016 58

Figure 22: Chilean Defense Imports by Country (%), 2012-2016 59

Figure 23: Chilean Defense Imports by Category (%), 2012-2016 60

Figure 24: Industry Dynamics – Porter’s Five Forces Analysis 62

Figure 25: Chilean GDP Per Capita, 2015-2025 75

Figure 26: Chilean GDP, Current Prices, US$ Billion, 2015-2025 76

Figure 27: Chilean LCU per US$ 2015-2024 77

Figure 28: Chilean Market Capitalization of Listed Companies (US$ Billion), 2005-2012 78

Figure 29: Chilean Market Capitalization of Listed Companies (% of GDP), 2005-2012 79

Figure 30: Chilean Exports of Goods & Services (LCU Billion), 2005-2014 80

Figure 31: Chilean Imports of Goods and Services (LCU Billion), 2005-2014 81

Figure 32: Chilean Goods Exports as a % of GDP, 2005-2014 82

Figure 33: Chilean Goods Imports as a % of GDP, 2005-2014 83

Figure 34: Chilean Gross National Disposable Income, 2005-2014 84

Figure 35: Chilean Service Imports as a % of GDP, 2005-2014 85

Figure 36: Chilean Service Exports as a % of GDP, 2005-2014 86

Figure 37: Chilean Foreign Direct Investment (US$ Billion), 2005-2014 87

Figure 38: Chilean Net Foreign Direct Investment as a % of GDP, 2005-2014 88

Figure 39: Chilean Government Cash Surplus/Deficit as a % of GDP (LCU), 2005-2012 89

Figure 40: Chilean Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 90

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