SAMI CEO: We are Building an Integrated Sector, Studying New Acquisitions

Localizing over 50% of the Saudi government military purchases and becoming one of the top 25 defense companies are two milestones the Saudi Arabian Military Industries (SAMI) is seeking to achieve by 2030.

In an interview with Asharq Al-Awsat, SAMI CEO Walid Abukhaled confirmed the state-owned defense company’s role in building an integrated military industries sector in the Kingdom, stressing that partnerships and acquisitions are a complementary part of the process.

The coming period will witness SAMI establishing a sector focused on maritime military industries, Abukhaled revealed, adding that new partnerships and acquisitions will be announced.

He stressed the importance of securing comprehensive supply chains for the Kingdom’s defense sector.

Speaking about SAMI’s strategy for reaching its goal of becoming one of the world’s top 25 defense companies, Abukhaled said it is centered around finding and striking partnerships with the best defense and aviation companies worldwide.

SAMI has signed an agreement to set up a joint venture with US firm Lockheed Martin at the International Defense Exhibition and Conference (IDEX) in Abu Dhabi. The defense company has also inked deals with major international players like L3HarrisTechnologies, Spanish shipbuilder Navantia, and Belgium's CMI Defense.

“The importance of these partnerships is that they bring you close to leading global companies in the field of military systems,” Abukhaled noted.

At the same time, we also acquired some companies and internal capabilities in Saudi Arabia

As for acquisitions, the CEO pointed out that SAMI has agreements with several companies inside Saudi Arabia that aim to develop and standardize some requirements and create greater efficiency.

Despite establishing global partnerships and completing initial internal acquisitions being core to the company’s strategy, Abukhaled said that SAMI’s chief concern is “supporting local supply chains in Saudi Arabia.”

“SAMI will not succeed if there are no reliable supply chains,” he stressed.

Confirming that SAMI will not be directly involved in the manufacture of military apparel, Abukhaled indicated that the company will rely on local and national companies.

“The company will be the main contractor in the military industries ecosystem, and we will rely on supply chains,” he explained.

For that reason, developing the infrastructure of Saudi SMEs in the military industry is a must, Abukhaled said, noting that doing so will make achieving the goal of becoming one of the world’s top 25 defense companies easy.

Abukhaled agreed that national acquisitions will make up the Kingdom’s military industry infrastructure while international partnerships will help shape the industry’s superstructure.

“Forging partnerships with international companies will ensure the transfer of advanced knowledge and technologies and help meet some of the requirements of the armed forces,” he said.

“As for the acquisitions, they are what prepare the infrastructure to accommodate and enhance acquired capabilities,” added Abukhaled.

When asked if SAMI is considering new acquisitions for the coming period, Abukhaled said: “Of course. We are constantly implementing acquisitions.”

“Reviewing the Kingdom’s defense industry and its integrated environment, we see that the local military sector needs maintenance, packaging and development services,” he noted, revealing that SAMI was currently studying potential acquisitions related to those provisions.

“We are greatly optimistic about the Saudi market and have a vision that illuminates our direction for the coming decade,” said Abukhaled, highlighting that “SAMI has taken important strides forward and is treading along a distinguished path.”

Although 2020 was a difficult year for many due to the outbreak of the coronavirus pandemic, it was a special year for SAMI.

“We have concluded many important agreements, obtained long-term business opportunities with the armed forces, and won contracts to develop products from scratch,” Abukhaled said about SAMI’s accomplishments last year.

In 2020, SAMI acquired the Advanced Electronics Company (AEC) as part of the largest military industries deal ever concluded in the Kingdom.

“Accordingly, circumstances have been set for the Kingdom to have a major start in 2021 and the years to come,” Abukhaled asserted.

The former US special envoy, Amos Hochstein, said the maritime border agreement struck between Lebanon and Israel in 2022 and the ceasefire deal reached between Israel and Hezbollah at the end of last year show that a land border demarcation “is within reach.”

“We can get to a deal but there has to be political willingness,” he said.

“The agreement of the maritime boundary was unique because we’d been trying to work on it for over 10 years,” Hochstein told Asharq Al-Awsat.

“I understood that a simple diplomatic push for a line was not going to work. It had to be a more complicated and comprehensive agreement. And there was a real threat that people didn’t realize that if we didn’t reach an agreement we would have ended up in a conflict - in a hot conflict - or war over resources.”

He said there is a possibility to reach a Lebanese-Israeli land border agreement because there’s a “provision that mandated the beginning of talks on the land boundary.”

“I believe with concerted effort they can be done quickly,” he said, adding: “It is within reach.”

Hochstein described communication with Hezbollah as “complicated,” saying “I never had only one interlocutor with Hezbollah .... and the first step is to do shuttle diplomacy between Lebanon, Lebanon and Lebanon, and then you had to go to Israel and do shuttle diplomacy between the different factions” there.

“The reality of today and the reality of 2022 are different. Hezbollah had a lock on the political system in Lebanon in the way it doesn’t today.”

North of Litani

The 2024 ceasefire agreement requires Israel to withdraw from Lebanon and for the Lebanese army to take full operational control of the south Litani region, all the way up to the border. It requires Hezbollah to demilitarize and move further north of the Litani region, he said.

“I don’t want to get into the details of other violations,” he said, but stated that the ceasefire works if both conditions are met.

Lebanon’s opportunity

“Lebanon can rewrite its future ... but it has to be a fundamental change,” he said.

“There is so much potential in Lebanon and if you can bring back opportunity and jobs - and through economic and legal reforms in the country - I think that the future is very bright,” Hochstein told Asharq Al-Awsat.

“Hezbollah is not trying to control the politics and remember that Hezbollah is just an arm of Iran” which “should not be imposing its political will in Lebanon, Israel should not be imposing its military will in Lebanon, Syria should not. No one should. This a moment for Lebanon to make decisions for itself,” he added.

SAMI CEO: We are Building an Integrated Sector, Studying New Acquisitions