TAMPA, Fla. \u2014 German defense contractor Rheinmetall plans to start building synthetic aperture radar satellites next year with Finnish SAR constellation operator Iceye, amid Europe\u2019s broader push to bolster military intelligence capabilities.<\/p>\n
The company signed a deal with Iceye May 8 to own 60% of a joint venture aiming to set up a satellite production facility in Neuss, Germany, where Rheinmetall is anchoring its space expansion plans.<\/p>\n
Financial terms were not disclosed, and the deal remains subject to final agreements and regulatory approvals.<\/p>\n
\u201cWith the establishment of the new joint venture, we are making further inroads into the space domain,\u201d Rheinmetall CEO\u00a0Armin Papperger said in a statement.<\/p>\n
\u201cWe are thus not only responding to the increased demand for space-based reconnaissance capabilities among armed and security forces worldwide, but also contributing to the preservation and expansion of Germany as a centre of technology.\u201d<\/p>\n
Growing defense appetite<\/strong><\/p>\n Global military spending hit a record $2.7 trillion in 2024, according to the Stockholm International Peace Research Institute (SIPRI), representing a 9.4% increase over the previous year and the sharpest annual rise since the end of the Cold War.<\/p>\n SIPRI said more than 100 countries increased their defense budgets last year as sovereign capabilities rise to the top of political agendas.<\/p>\n Germany\u2019s military expenditure surged 28% to $88.5 billion, making it the largest defense spender in Western Europe for the first time in decades, behind only the United States, China and Russia.<\/p>\n The joint venture comes months after Germany amended its constitution to remove a 1% GDP cap on defense spending. The reform is part of a sweeping infrastructure and security investment plan worth roughly one trillion euros ($1.12 trillion) over the next decade.<\/p>\n Space is critical for both infrastructure and security, Walther Pelzer, head of Germany\u2019s space agency DLR, said April 9, weeks after the reform passed.<\/p>\n \u201cThis is the reason that I expect that space will become part of this cake,\u201d he said.<\/p>\n Pelzer said increased spending will help Germany become a stronger partner within the European Union while also strengthening bilateral and multilateral ties beyond the bloc.<\/p>\n As the U.S. reviews its global security role, the European Commission also recently announced plans to mobilize up to 800 billion euros to bolster the region\u2019s defense capabilities, with a large proportion anticipated to be allocated for space.<\/p>\n \u201cThe latest policies adopted in Germany and many other European countries suggest that Europe has entered a period of high and increasing military spending that is likely to continue for the foreseeable future,\u201d said SIPRI researcher Lorenzo Scarazzato.<\/p>\n Ramping up a strategic alliance<\/strong><\/p>\n The joint venture also marks the latest milestone in a steadily expanding partnership between Iceye and Rheinmetall, which reported nearly $11 billion in 2024 revenue and employs more than 31,000 people.<\/p>\n Production under the joint venture is expected to begin before the end of June 2026. The companies say the initiative could later expand to include other space-based capabilities.<\/p>\n During Rheinmetall\u2019s May 8 earnings call, Papperger said the venture could eventually generate up to 1 billion euros in annual sales, though he did not provide a timeline.<\/p>\n Founded in 2014, Iceye operates one of the world\u2019s largest SAR constellations,\u00a0providing government and commercial customers with imagery using radar signals unaffected by cloud cover, weather or lighting conditions.<\/p>\n