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CEO Interview: SAMI To Strengthen Local Supply Chain « Breaking Defense

The Saudi Arabian Military Industries (SAMI) Booth at IDEX 2021.

ABU DHABI: From inking the largest military industries deal by a Saudi company to partnering with top local and international defense companies, the Saudi Arabian Military Industries (SAMI) is aiming high for years to come.

“2020 has been a great year for SAMI, not only because we started operationalizing the ongoing joint ventures, but also managed to win some strategic contracts and acquire the largest defense deal in the kingdom and region,” Walid Abukhaled, CEO of SAMI told Breaking Defense in an exclusive interview at IDEX.

Back in December, the wholly-owned subsidiary of the Public Investment Fund acquired the Advanced Electronics Company (AEC), a move that supports the company’s strategic plan to expand its business and enter the progressive defense electronics sector. The purchase is expected to complete in the first quarter of 2021 and as a result, AEC will become a 100% Saudi-owned company.

“When you look at it, this is the biggest deal when it comes to defense acquisition,” he told me. “AEC has 32 years of experience in the defense electronics sector, 2,200 employees, 500 engineers and Saudization is close to 85%. Put things together, this is a deal worth billions of Riyals.”

One of Abukhaled’s top goals is to outsource and achieve its target in localization. “We will be outsourcing through giving contracts to local companies to strengthen the Saudi supply chain,” he emphasized. “To achieve localization, we are working hard to ensure that every contract we take from now on contains a minimum of 50% localization. Although this is our target for 2030, we are already starting to roll the ball from now.”

When asked what the US and other allies can do to better support SAMI with its military expansion, Abukhaled said his strategy is to keep working with the best to build the know-how, grow together in the kingdom and deliver customers’ requirements.

Back in February, SAMI and L3Harris Technologies launched a JV that focuses on localizing L3Harris’ advanced communication and sensor products and expands to include prime contractor responsibilities for integrated mission systems and platforms, thus leveraging robust local industry partnerships.

Together, the two parties aim to collaborate in areas, such as technical operator and maintenance training; transfer of production and transfer of technology through research and development programs in approved technologies.

“If you look at it, there is a huge synergy between AEC and L3Harris as both are pioneers in their common fields,” he said.

The company also signed a joint venture with Lockheed Martin to develop localization capabilities. “This is the largest defense company in the world, and we aim to achieve that through the transfer of technology and knowledge and training of Saudi nationals to manufacture products and provide services to the Kingdom’s armed forces,” he told Breaking D.

At IDEX, SAMI and Lockheed Martin announced they will develop capabilities in manufacturing technology, software and systems integration, as well as the production, maintenance, and repair of rotary and fixed-wing aircraft, missile defense systems, and naval and land systems.

SAMI will have a 51-percent shareholding and Lockheed Martin will hold the remainder.

For 2021, Abukhaled sees growth in the defense sector, opportunities to win businesses and execution of the previously won contracts. “It is hard to pick which domains will witness good growth because we expect this to happen across all sectors, however, since we acquired AEC we see a huge potential in the defense electronics filed”, he said.

Projecting beyond that, Abukhaled  says SAMI will further boost its current strategy and grow certain capabilities.

“I see SAMI being at the center of the Saudi defense supply chain,” he told me. “We will be a role model to follow when it comes to governance, business ethics and compliance while working in the highest quality standards.”

The company also recently teamed up with UAE’s Nimr to transfer armored vehicle production and technology to the kingdom in a move described as setting a regional precedent.

“It is all about building a very healthy pipeline of business opportunities with the Saudi entities, which we did to set up a very strong foundation for our future,” he concluded.

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