SAMI and the Localisation Mandate: How Saudi Defence Industry M&A Is Building Real Capability

Demand-side funding gives the mandate weight. The U.S. government commercial guide says Saudi Arabia’s 2025 budget allocated $72.5 billion to defense spending, or approximately 21.2% of its total budget, and ranks the Kingdom as the fifth-largest defense spender in the world in 2023 behind the United States, China, Russia, and India. Another analysis cites Ministry of Finance figures estimating military expenditure at USD 63.7 billion in 2025, described as an increase of 1.1% over 2024. The same analysis also references an AGBI figure, citing SIPRI, that Saudi Arabia in 2025 spent $83 billion on defence, up 3.5% year on year, equivalent to 6.5% of GDP and about 3% of global military expenditure. The different definitions matter, but the industrial implication is consistent: large budgets can be steered into local workshare when mandates and contracting terms require it.

Where the Mandate Turns Into Industry: SAMI, GAMI, and Workshare

Institutional architecture converts procurement into factories, skills, and certified suppliers. GAMI, established in 2017, is described as the regulator, enabler, and licensor of Saudi Arabia’s military industries sector, with a mandate that includes industrial licensing and the governance framework for defence manufacturing development. SAMI is described as a state-owned defense company launched in May 2017 by PIF, operating across aeronautics, land systems, weapons and missiles, and defence electronics. The Vision 2030 tracker adds that SAMI has established subsidiaries in these same domains, and that joint ventures with Lockheed Martin, Boeing, BAE Systems, Raytheon, and other contractors have created local assembly and MRO capabilities. It also states GAMI’s licensing framework has attracted over 100 domestic and international companies to the Saudi defence ecosystem. This is where Saudi defence industry M&A becomes practical: consolidation and partnership structures can bundle capabilities and qualify firms to win mandated local work packages.

Localisation rises fastest where fleets already need constant support. The Vision 2030 tracker argues that if localisation includes MRO, sustainment, and through-life support services, achievable percentages increase significantly, because service contracts can be transferred to Saudi-based entities, including joint ventures. It also notes a pragmatic focus on maintenance, ammunition, armoured vehicles, and electronics, where localisation is achievable on shorter timelines. Policy tools reinforce this direction. One source describes the SAIP program as mandating that a portion of contract value be spent on developing Saudi industrial, technological, or human capital capabilities. Another source says GAMI’s offset policy framework mandates technology transfer ratios for foreign primes exceeding SAR 500 million in contract value, and links this to joint venture formation with SAMI Advanced Electronics for radar and electronic warfare subsystem production. For investors and operators, this is why service-heavy capabilities, certified parts, and electronics integration can be central to localisation outcomes.

The remaining gap is still substantial. The Vision 2030 tracker describes a “30-percentage-point gap” still to close versus the 50% target and stresses why deep localisation is hard: it requires supply chain development, technology transfer, workforce training, and quality certification, while high-value platforms such as fighter aircraft, advanced missile systems, and naval vessels require decades of capability development. At the same time, localisation is already reshaping supplier eligibility and project design. A market note on C4ISR states that Vision 2030 localisation mandates are redirecting foreign OEMs toward joint ventures with SAMI and restructuring supplier eligibility across Saudi defence procurement. Put together, the picture is a multi-year industrial build in which mandates set the direction, and corporate structures, partnerships, and selective acquisitions help assemble the capabilities needed to deliver local content that procurement can count.