BI-WEEKLY MARKET INTELLIGENCE REPORT 16.08.2025 to 29.08.2025
- harrygeisler2
- 6 days ago
- 9 min read
Welcome to the latest edition of Dual-Use Dispatch – your bi-weekly briefing on the intersection of commercial innovation and national security.
In this issue: NATO hits a milestone as all members meet the 2% GDP defence spending target amid Europe’s ramp-up of arms production, including Germany opening a massive new munitions plant. The UK’s expeditionary reach is on display as a carrier strike group arrives in Japan, deepening Indo-Pacific security ties. Israel conducts a rare raid in Syria targeting Iranian-linked sites, while West Africa’s coup-hit Sahel remains tense under junta rule. Meanwhile, an international coalition calls out Chinese firms aiding cyber-espionage, and US agencies warn that Russian state hackers have burrowed into critical networks around the world.
MAJOR PROCUREMENT DEVELOPMENTS
Germany’s Industrial Ramp-Up: German arms maker Rheinmetall opened a new ammunition factory on August 27 that will be Europe’s largest at full capacity. The €500 million plant can produce 25,000 rounds this year (scaling to 350,000 by 2027) and is seen as a model for a “pan-European defence ecosystem” of rapid arms production in NATO countries. CEO Armin Papperger noted interest in building similar factories in Lithuania, Britain, Romania and Latvia as Europe seeks to replenish stockpiles depleted by aid to Ukraine.
Rheinmetall Eyes Naval Expansion: In a bid to diversify beyond land systems, Rheinmetall signalled plans to acquire German warship builder Naval Vessels Lürssen (NVL). Industry sources say the family-owned NVL, which has €1 billion in annual sales, may sell its naval yards as it refocuses on yachts. Rheinmetall’s board will review the potential deal, which would cement the company’s expansion into shipbuilding amid booming European defence budgets.
Poland’s Modernisation Spree: On August 26, the US approved a potential $1.85 billion package to support Poland’s fleet of F-35 fighter jets. The sale, focused on sustainment, training and logistics, follows a string of Polish arms deals as Warsaw drives defence spending to 5% of GDP by next year. Poland has also signed a $3.8 billion contract to upgrade its 48 F-16 fighters and recently ordered additional K2 tanks and K9 howitzers from South Korea, rapidly transforming its armed forces into NATO’s frontline bulwark in the east.
US Stockpiles Critical Minerals: Washington moved to secure key materials for defence supply chains, launching a tender to buy up to $500 million worth of cobalt over five years. The US Department of Defense is seeking ~7,480 tonnes of alloy-grade cobalt to shore up stockpiles used in jet engines, batteries and turbines. This comes after China curbed exports of rare earth magnets, underscoring US efforts to reduce reliance on Chinese sources for strategic minerals.
STARTUP RADAR: DUAL-USE IN FOCUS
Stark (Germany) – AI-Enabled Military Drones Platform
Munich-based defence tech startup Stark has raised $62 million in Series C funding (Aug 21), backed by Sequoia Capital, Peter Thiel’s fund and even NATO’s new innovation fund. Founded in 2022, Stark develops autonomous “loitering munitions” – smart drones that can patrol battlefields and strike targets – along with AI-driven surveillance UAVs. The new financing, which values Stark at ~$500 million, will accelerate production of its next-generation unmanned systems to meet growing demand from Western militaries.
The company is expanding into the UK and other markets, positioning itself as a key provider of AI-powered drones for NATO forces. Notably, investors in this round include the US intelligence community’s In-Q-Tel, signalling strong official interest in Stark’s dual-use technology. With total funding now about $100 million, the startup plans to double its workforce and integrate its drones with legacy platforms, bridging Silicon Valley-style innovation and European defence needs.
Company snapshot
Name: Stark Drone Systems GmbH
HQ: Munich, Germany
Founded: 2022. Team: ~50 employees (with alumni from Airbus and ETH Zurich)
Funding: $62 million Series C (Aug 2025), ~$100 million total
Investors: Sequoia, 8VC, Thiel Capital, NATO Innovation Fund, In-Q-Tel, Project A
Focus: AI-guided loitering munitions and ISR drones for military applications
MAJOR DEFENCE AND SECURITY DEVELOPMENTS
Europe – Defence Spending Surge: NATO data released August 28 confirm that all 31 allies will meet the longtime goal of spending at least 2% of GDP on defence in 2025. This marks a dramatic shift from just last year, when a third of NATO countries still fell short. Poland now leads with 4.48% – the highest in the alliance – followed by Lithuania (4.0%) and Latvia (3.7%). Only these three exceed NATO’s new target of 3.5% by 2035, but across Europe budgets are climbing fast in response to Russia’s war on Ukraine. Turning money into capabilities is the next challenge: NATO Secretary General Mark Rutte warned that “cash alone doesn’t provide security” without timely procurement and innovation. On that front, Germany inaugurated a new artillery ammunition plant with NATO’s chief in attendance, showcasing a continental drive to boost arms production and reduce reliance on global supply chains.
NATO’s 75th Anniversary celebratory event in Washington, US, July 9, 2024. Image credit: REUTERS/Yves Herman/File Photo UK Carrier Strike Group in Indo-Pacific: Britain’s Carrier Strike Group, led by the HMS Prince of Wales aircraft carrier, arrived in Tokyo on August 28 for a high-profile port visit and joint drills. Japanese Defence Minister Gen Nakatani hailed UK-Japan security cooperation as “unprecedented” as the two countries seek to counterbalance China’s growing military reach. The Prince of Wales – flagship of the Royal Navy since her sister ship Queen Elizabeth is under maintenance – deployed with F-35B stealth fighters and escort ships for exercises with the Japanese Maritime Self-Defence Force. British Defence Secretary John Healey noted that Indo-Pacific security is “indivisible” from Euro-Atlantic security, underlining Britain’s post-Brexit strategy to be a persistent presence in Asian waters alongside allies. The visit comes amid expanded UK-Australia training and signals London’s commitment to uphold freedom of navigation and regional stability.
HMS Prince of Wales has arrived in Tokyo, Japan. Image credit: CPO Phot Nobby Hall China’s Parade Projects Deterrence: Beijing is poised to showcase an array of new weaponry in what is billed as its largest-ever military parade, marking 80 years since World War II’s end. The parade, set for next week, will feature hypersonic missiles, stealth combat drones and advanced battlefield networks alongside conventional hardware. Chinese officials intend the display to highlight the PLA’s ability to “win future wars” through cutting-edge tech integration. Analysts note the event is as much about deterrence as celebration: a “performative” show of force aimed at dissuading adversaries. One novel system expected is a large autonomous sea drone, hinting at new threats to naval forces. While the parade’s pageantry grabs attention, its subtext is China’s message to the region that its military modernisation – from AI-enabled command systems to joint force projection – is accelerating despite international tensions.
China is set to host its largest miliary parade to commemorate 80 years since the end of World War II. Image credit: Associated Press Middle East – Israel Strikes in Syria: Israel carried out a rare airborne raid near Damascus on August 27, landing troops at a former Syrian air defence base during a series of airstrikes. The target area, in the Kiswa region southwest of the capital, had been a strategic hub for Iranian and Hezbollah forces during the Syrian civil war. Two Syrian army sources said Israeli forces briefly touched down but later withdrew; Syrian state media reported that drone strikes a day prior killed six soldiers in the same vicinity. The Israeli military declined comment on the operation. Observers note that Israel has stepped up its campaign against Iranian weapons shipments and proxy militias in Syria, even as Damascus engages in Russian-brokered talks to reduce friction. The daring landing operation – coinciding with high-level Syrian security discussions – underscores the volatility of the theatre and Israel’s determination to push back against Iran’s military entrenchment just across its border.
Israel strike kills six Syrian troops, Syria says. Image credit: ANADOLU via Getty Images Africa – Coup Regimes Under Strain: The security situation in the African Sahel remains fragile two years into a string of military coups. In Niger, the junta that seized power in 2023 is defying regional pressure as economic sanctions bite. The regime has so far rebuffed mediation by West Africa’s ECOWAS bloc, even after proposing a three-year transition timeline that ECOWAS flatly. Meanwhile Mali and Burkina Faso – Niger’s junta-led neighbours – have forged a mutual defence pact with Niamey and begun joint military deployments aimed at containing Islamist insurgencies. Despite some tactical successes by these regimes against jihadist groups and armed rebels, their rifts with Western partners and loss of international aid have exacerbated long-term risks. The United States and European Union have cut security assistance to junta governments, urging a return to civilian rule. With France’s counterterrorism presence expelled and Russia’s Wagner mercenaries in flux, local militaries face an uphill battle to secure vast border regions from Islamic State and al-Qaeda affiliates. The past weeks saw sporadic militant attacks in Mali and Burkina Faso, underscoring that a purely military response, absent political reconciliation and development, leaves the door open for further instability.
The African Union has suspended Niger over coup and is preparing sanctions. Image credit: File: AP Photo
INFRASTRUCTURE SECURITY DEVELOPMENTS
Coalition Exposes Chinese Cyber Suppliers: A broad coalition of Western and Indo-Pacific nations (including the US, UK, Germany, Japan and others) issued a 37-page advisory on August 27 accusing three Chinese tech companies of aiding state-backed hacking. The firms – Sichuan Juxinhe, Beijing Huanyu Tianqiong, and Sichuan Zhixin Ruijie – allegedly provide products and services to China’s cyber-espionage units, including the PLA and Ministry of State Security. One of the companies was already sanctioned by the US Treasury for links to a hacking group dubbed “Salt Typhoon” that siphoned vast quantities of Americans’ phone records. The other two recently suffered unexplained data leaks believed to be tied to their spyware activities. China’s Foreign Ministry denied the claims and accused the US of smearing China to politicize cybersecurity issues. The joint alert – a rare multinational naming-and-shaming effort – reflects an intensified push by allied governments to expose the industrial ecosystem enabling China’s state hacker apparatus.
Russian Hackers Breach Critical Networks: The FBI and Cisco Systems warned on August 20 of an ongoing campaign by elite Russian cyber units to penetrate global critical infrastructure by exploiting old router software. Hackers tied to Russia’s FSB (Center 16) have implanted malware on thousands of Cisco networking devices that were running unpatched IOS firmware. By extracting configuration data at scale, the attackers can gain long-term access and conduct reconnaissance in victim networks. The year-long operation targeted entities in telecommunications, higher education, manufacturing and industrial control systems across North America, Europe, Africa and Asia – all chosen for their strategic interest to Moscow. Officials say the actors are likely preparing for potential disruptive attacks, having secured footholds in power grids, ports and other infrastructure. Cisco’s threat intelligence unit noted that other state-backed groups are probably running similar exploits against aging network gear globally. The revelation highlights the urgency for organizations to update or replace legacy devices that can serve as backdoors for espionage and sabotage.
Ransomware Hits US State Government: A widespread “network security incident” crippled state government services in Nevada in late August, forcing many offices offline. Websites and phone lines for multiple state agencies went down on August 25 in what authorities suspect was a ransomware attack, though officials have not publicly confirmed it. The governor’s office reported that recovery efforts were underway with support from the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency. Such outages across an entire US state’s networks are rare and underscore the disruptive potential of criminal cyber gangs targeting public-sector infrastructure. The incident follows a string of attacks on city and county systems over the past year. Cybersecurity analysts note that ransomware groups may be escalating attempts to extort government targets, betting that the cost of prolonged service outages will pressure authorities into paying. Nevada’s response, conducted in coordination with federal agencies, will be closely watched as a test of resilience against large-scale cyber disruption in the public sector.
YAVA’S TAKEAWAYS:
European Defence Renaissance: From surging budgets to new factories, Europe’s response to the Ukraine war is a wholesale shift from complacency to capability. Germany’s accelerated procurement and pan-European industrial projects signal that the era of “peace dividends” is over – expect a tighter web of EU defence collaborations and a welcome mat for innovative startups to fill technology gaps.
Britain’s Global Posture: The UK is translating its “Global Britain” vision into action by sailing carriers through the Indo-Pacific and aligning cyber strategies with allies. Post-Brexit, London is leveraging defence diplomacy (like the Japan port call) to reinforce its relevance on the world stage, even as it balances commitments from Europe to Asia.
Cyber Front Line: The exposure of China’s cyber suppliers and revelations of Russian network breaches reaffirm that cyberspace is now a front line in great-power competition. Critical infrastructure, whether routers, power grids or airports, can be silently penetrated long before any kinetic conflict. Governments and industry will need to harden legacy systems and share threat intel faster to keep adversaries at bay.
Regional Fragility Persists: Instability in conflict-prone regions continues to threaten global security. Israel’s Syria strike underscores that Iran’s proxy network remains a flashpoint, requiring vigilance beyond Gaza. In Africa’s Sahel, coup-led states fighting insurgencies face a legitimacy crisis that external military aid alone cannot fix. Sustained engagement, whether diplomatic, economic or training support, will be critical to prevent these fragile regions from becoming breeding grounds for the next international crisis.
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