The European defence electronics sector is experiencing a significant surge in demand, driven by accelerated military spending and a shift toward sensor-heavy military platforms across the continent, accroding to Astute and eenewseurope.
German defence electronics specialist Hensoldt recently reported an order intake of €4.71 billion for 2025, representing a 62% year-on-year increase. This growth has lifted the company’s total backlog to €8.83 billion, reflecting the rapid expansion of procurement programmes across NATO and a broader commitment to European defence investment in response to current geopolitical tensions.
Financial performance across the sector remains robust, with Hensoldt recording 2025 revenue of €2.455 billion, a 10% increase from the €2.24 billion reported the previous year. The company’s adjusted EBITDA stood at €452 million, maintaining an operating margin of 18.4%. This demand is heavily concentrated in high-value electronic subsystems, such as air-defence radar, electronic warfare systems, and optronics modules. The sensors division alone accounted for €3.14 billion in orders, while the optronics segment – providing imaging and targeting systems for platforms like the Leopard 2 – saw order intake more than double to €1.585 billion.
However, for businesses within the UK and European supply chains, this influx of orders is met with persistent structural challenges. Manufacturers are facing significant supply chain constraints and staffing bottlenecks that are currently slowing the conversion of record backlogs into revenue. This is exacerbated by a long-term decline in the domestic electronics manufacturing base; over the last two decades, European production capacity for printed circuit boards, chip substrates, and advanced packaging has decreased by more than 35%. This imbalance increases the reliance on external suppliers for critical components used in RF systems and secure communications hardware.
For sub-contractors and technical specialists, the technological shift presents a clear growth trajectory. Electronics currently comprise approximately 17% of the total value of defence equipment, a figure projected to reach 25% by 2035 as systems increasingly integrate software-defined architectures. To address these vulnerabilities, the European Defence Fund has allocated €1.065 billion for research, including €58.5 million for radar and infrared sensing technologies and €25 million for chiplet-based semiconductor architectures. Looking ahead to 2026, revenue in this sub-sector is forecasted to reach €2.75 billion. For the UK defence supply chain, the immediate priority remains the scaling of production capacity to match procurement schedules that continue to outpace delivery capabilities.
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Post written by: Vicky Maggiani
Vicky has worked in media for over 25 years and has a wealth of experience in editing and creating copy for a variety of sectors.
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