‘Asia is a Major Market for Rafael’

Rafael Advanced Defense Systems has seen a significant increase in international orders, with the Asia Pacific region emerging as a key market.

“The Asia Pacific region has emerged as a key market for Rafael, with substantial growth observed over the last decade,” says Daniel Tsemach, International Media Manager and Spokesperson at Rafael Advanced Defense Systems, in an interview. “The region's growing geopolitical complexities and security challenges have led to increased demand for advanced defense solutions, providing Rafael with significant expansion opportunities. The company has strategically focused on strengthening its presence in the region, establishing partnerships, and tailoring its offerings to meet the specific needs of Asian Pacific countries.”

What are some of the major capabilities that you will be showcasing at the Singapore Airshow?

Rafael will be showcasing its entire Air Defense Portfolio, Spice Smart guided munitions family, intelligence-based systems, micro-satellites amongst several other systems and their aerial applications. The two most recently unveiled technologies that will be displayed for the first time in Singapore are the Sky Sonic Hypersonic Interceptor (unveiled in 2023) and the Ice Breaker (unveiled in 2022). These unique technologies illustrate Rafael’s prowess in innovating the defense technologies of tomorrow based on 75 years of scientific research and development of defense solutions that have accumulated decades of operational data with which existing systems are constantly upgraded and unthought-of solutions are created.

Due to ongoing wars and regional tensions, there has been a significant uptick in demand for air defense systems across regions. How well-positioned is Rafael to take advantage of the situation?

Rafael’s air defense systems have achieved international recognition with unique world-leading capabilities like the Iron Dome, David’s Sling, Spyder, and Drone Dome as well as others. These systems are operationally proven and have certainly garnered increased interest in recent years. Having major international sales of these systems to foreign countries is evidence of the need, and the ability of the company to provide its solutions to its global allies. Among the notable sales are those of the Iron Dome to the US Army, David's Sling to Finland, the 2021 sale of Spyder to the Czech Republic, which was the first-ever sale of an AD system to a NATO member state, and numerous sales of the Drone Dome to NATO member states as well as others.

Over the last decade, has there been a marked change in the company’s breakup between domestic and international orders?

Over the last decade, Rafael has experienced a notable shift in the breakdown between domestic and international orders. While domestic orders remain significant, there has been a discernible increase in international orders, reflecting the company's successful efforts to expand its global footprint and establish itself as a key player in the international defense market.

2022 was a record-breaking year for the company in terms of sales and order backlog. How successful a year was 2023? How confident are you about sustaining the momentum in 2024?

In 2023, Rafael continued its strong performance following the record-breaking year of 2022. The company saw sustained success in terms of sales and order backlog, further solidifying its position as a leading defense systems developer and manufacturer. Confidence in sustaining momentum in 2024 remains high, fueled by several factors such as continued demand, strategic investments, market expansion, and talent acquisition.

Continued Demand: The global security landscape continues to evolve, with ongoing threats necessitating the development and acquisition of advanced defense systems. Rafael's reputation for innovation and reliability ensures continued demand for its products and services.

Strategic Investments: Rafael has been proactive in investing in research and development, ensuring the continuous enhancement of its product portfolio to meet evolving threats and customer requirements. This ongoing investment positions the company well for sustained growth.

Market Expansion: Rafael's success in penetrating international markets, coupled with its strong presence in domestic defense procurement, provides a diversified revenue stream that mitigates risks associated with fluctuations in any single market.

Talent Acquisition: The influx of talented individuals eager to contribute to Rafael's mission underscores the company's attractiveness as an employer of choice. This influx of skilled personnel enhances Rafael's capabilities and augments its capacity to deliver on existing and future contracts.

Supply chain issues have been a major issue in the post-pandemic period for all major defense companies. What is Rafael doing to mitigate the problem? Have you seen an improvement in the situation over the last year?

Supply chain issues have indeed posed challenges for defense companies in the post-pandemic period, and Rafael is not immune to these challenges. However, the company has implemented various measures to mitigate these issues, including diversifying its supplier base, enhancing communication and collaboration with suppliers, and optimizing inventory management practices. While improvements have been observed over the last year, Rafael remains vigilant in addressing supply chain vulnerabilities to ensure uninterrupted delivery of critical defense systems to its customers.

How close is the Iron Beam High Energy Laser Weapon System to be operational? How much of a demand do you foresee for the system internationally?

The Iron Beam is a unique system developed to provide a first-of-its-kind energy-based interception capability with existing air defense systems. The Israeli MOD is working to operationalize the system with RAFAEL for use in the IDF. The system is expected to be fully operational by the end of 2025. This is truly a revolutionary technology that will allow incredibly cost-effective air defense solutions to support kinetic capabilities.

What is the company’s view on joint ventures involving technology transfer and co-development of defense technology? Do you think that is a viable way of growing the company’s global footprint?

Global cooperation is a core component of Rafael’s vision and strategy. We have established joint ventures worldwide with local industry leaders in co-development, local manufacturing, and production, as well as technology transfer. Rafael’s operations are conducted according to the policy of the Israeli Ministry of Defense. The company has thrived for decades in prioritizing such business ventures and methods.

How significant a market is the Middle East now for Rafael? Do you anticipate it becoming one of your primary markets in the near future?

Since the realization of the Abraham Accords, Rafael has engaged in partnerships and general industry-related activities in the Middle East and beyond, according to the policy of Israel's MOD. Given the relevance of Rafael systems and the local security context of the Middle East, our solutions are of great interest to our regional allies.

What explains the resounding success of Israeli defense firms in the international market? What is it that makes the company’s products stand out?

Rafael’s excellence and uniqueness are the product of over 75 years of R&D. The company was founded in 1948 as the science corps of the IDF and has since blossomed into a global defense leader. With over 75 years of scientific research and development and the engineering of defense solutions used by the IDF and other international military services, we have accumulated decades of operational data. Rafael’s portfolio of defense solutions at the Singapore Air Show is almost entirely operational and this allows our engineers to gather lessons from the conclusions and takeaways of our customers. This allows them to look at real-life obstacles and efficiently generate solutions and improvements.