JERUSALEM (VINnews)  — In recent years, Israel’s defense industries have been performing exceptionally well. Since the outbreak of the Russia–Ukraine War, and even more so since the start of “Swords of Iron”, global demand for defense systems has surged, as countries around the world increased budgets, replenished stockpiles, and accelerated procurement processes. However, a key question is now emerging: how long will this trend continue?

As demand grows, more countries are seeking to enter the market and capitalize on the opportunity. For example, Japan is expected to ease its arms export rules, a move that could turn it into a significant player and intensify competition for contracts, especially in Europe and Asia.

Roy Bergil, founder and CEO of Veloryx with over two decades of experience in the defense industry, suggests in a Maariv podcast that we should be looking at the broader picture.

“What we are seeing now is not an arms race,” he says. “It is mainly the replenishment of stockpiles. The real military buildup is still ahead.”

According to him, many countries entered recent years with low inventory levels, partly due to the assumption that large-scale conflicts were unlikely. The war in Ukraine changed that perception.

“Europe was not prepared,” he explains. “Now countries are first filling what they lack. Only afterward comes the stage of rebuilding military strength.”

This distinctionbetween “stockpile replenishment” and “military buildup” is central to his analysis. What currently appears to be a boom in defense industries is, at this stage, largely an emergency response by countries trying to close gaps.

“There are countries today telling defense companies: ‘Whatever you produce we’ll buy. Make 10, make 100, whatever you produce, we’ll take,’” he says. Still, he believes the main phase is yet to come. Even if the war in Ukraine ends, and even if regional conflicts subside, the result will not be a quick return to normal, but rather an acceleration of military strengthening.

Alongside high demand, more countries are entering the field. Nations such as Japan and South Korea are expanding their defense activity and leveraging existing industrial production lines. As the automotive industry undergoes major changes, especially with the rise of Chinese electric vehicles, many factories now have excess capacity that can be converted to defense production.

This raises the question: will new entrants erode the advantage of established defense industries, including those in Israel? Bergil believes not. Entering the market does not immediately make a country a serious competitor.

“Missile technology—how to deliver it, its precision, and countless other parameters—takes time to develop,” he explains.

Even if factories can be repurposed or new production lines established, the ability to develop truly advanced systems is built over many years of testing, iteration, and improvement, along with a key Israeli advantage: proven battlefield experience. Therefore, even if new players enter the market, the gap with established companies will not close quickly.

For Israeli defense industries, the implications are twofold. On one hand, they are currently benefiting from very high demand and a long-built advantage. On the other hand, they cannot assume this boom will last indefinitely.

Bergil expects that in the longer term, there will be a process of consolidation:“When companies pop up like mushrooms after the rain, eventually comes a period of consolidation,” he says. Some companies will merge, others will disappear, and the sector will reorganize around stronger players with broader solutions.

Ultimately, the key question is not just how much weaponry will be sold in the coming years, but what companies will do with the profits from this period.

“Did they just sit on their R&D and collect profits, or are they reinvesting those profits into future products?” According to him, the advantage of existing companies will not be preserved solely by what they sell today, but by whether they use these strong years to stay one step ahead of tomorrow’s competitors.