Let’s continue talking about the economics of defense supply chains, but with new information based on what we previously discussed on the same topic, linking it to Egypt's opportunities in these industries. After this post, you will fully understand why I criticized the idea of "media narcotics" that claims we are making a complex and advanced secret weapon that will astonish the enemy.
If you look at any modern weapon system – whether it’s a missile, an aircraft, or a drone – you will find that every piece of it comes from a different company, in a different country, and from multiple generations of technology. This is why I previously clarified that the more important question is not "who makes the weapon?" but "who controls the supply chain that makes this weapon exist in the first place?"
The United States today owns about 15% of the global defense production, but it controls more than 50% of the technical chains feeding the defense industries worldwide: from microchips, software, navigation systems, sensitive electronic components, to every critical part of any military system.
In other words, France may be able to manufacture an aircraft without America, but it might face difficulties in operating it if the United States stops supplying a particular microchip. This is where the concept of “economics of control” in defense industries emerges, meaning that the real challenge is not in manufacturing the weapon, but in owning the sovereign inputs without which the entire industry ceases to function.
Let’s take Russia as an example: after the invasion of Ukraine, it discovered that it has tank factories, but it lacks enough smart chips. The Russian defense agency began purchasing civilian chips from the black market and dismantling household appliances to extract components from them. This is a practical example that illustrates how the economy can paralyze a military system even if it possesses a massive arsenal. Imagine that there are Russian tanks operating today with components taken from a washing machine or refrigerator!
Meanwhile, Ukraine, despite its industrial weakness compared to Russia, has benefited from a vast Western supply network. Every drone brought down in the war has more than 20 companies behind it in 10 different countries, and they can manufacture a replacement within a few hours. Today’s war has become a war of production networks and transfer of intellectual property, rather than merely a war of armies on the ground.
The cost of war has become linked not to the number of destroyed tanks, but to the speed of replacing the components lost in those tanks. Thus emerged a new term in defense literature: “resilient supply chains,” meaning the ability to resume production quickly after any shock.
This is why modern military forces are working to build distributed manufacturing capabilities. Turkey, for example, enables every medium or small company to enter the defense sector as a supplier or subcontractor, so that if a major factory goes down, the system can continue to produce.
In the United States, there is what is called the Defense Industrial Base (Defense Industrial Base), which is a network of thousands of civilian and military suppliers intricately interconnected, with the goal of maintaining the capability to quickly replace component losses. The problem is not losing the weapon itself as we have pointed out, but in losing the component that makes or operates it.
As for Egypt, serious entry into defense industries does not start with the establishment of factories for tanks or aircraft, but from the ground up: from mapping supply chains, studying the market in depth, classifying sovereign components and those suitable for supply, and then connecting local suppliers to partial projects that generate direct returns in hard currency.
Without understanding the economics of supply chains, we will continue to measure success by the number of tanks or by promotional images from the "IDEX" exhibition, while real growth starts from the factory that makes the screw that holds the aircraft's wing, not from the factory that makes the wing itself. This is why I say that the images and political propaganda that deceive people are nothing but a joke to those who understand the field. We must work from the ground up to achieve true technological and operational superiority, not through images and media slogans.
This is well understood by countries like South Korea and Turkey, as they have moved with the same logic: from partial suppliers to global companies, from the bottom up. Repeat after me: from the bottom up; from a cable workshop to a semiconductor factory, to a drone wing factory, and then to a complete drone factory. Ironically, the entire drone factory is the easiest in the chain and the least important.
Today, South Korea is among the top five countries in the world in defense industry exports, and 80% of its defense companies were originally civilian companies working in electronics and automobiles just twenty years ago. This means that its rise started from very low levels, not from establishing a factory for drones to impress others.
I reiterate finally: military power today does not lie in owning the weapon, but in having the ability to reproduce it quickly and in having a reliable network of local or international suppliers. Controlling supply chains is at the heart of modern power, and smart supply chains have become a strategic weapon in their own right.
This is an AI-generated English translation. The original text is in العربية
PhD Researcher in Defense Contracting and Cooperation Policies
