October 2021
Mapping the AI Investment
Activities of Top Global
Defense Companies

CSET Issue Brief
AUTHOR S
Ngor Luong
Rebecca Gelles
Melissa Flagg

Center for Security and Emerging Technology | 1 Executive Summary
As a dual -use technology, artificial intelligence (AI) has the
potential to transform a nation’s economy, national security, and
society. Militaries across the globe, including the U.S. Department
of Defense (DOD), are increasingly treating AI as a technology that
is central to their long -term strategies and planning. One of the
most significant paths of acquisition and integration of emerging
technologies, inclu ding AI -enabled technology, into defense
systems and platforms is through the largest global defense companies. As militaries around the world are ramping up their
capabilities and capacity to harness AI, it is important to begin to understand the state of AI innovation within the major global
defense companies.
1
With tech giants such as Google and Amazon at the forefront of AI
innovation , major global defense companies are pressed to step up
their innovation -related activities to keep pace with the larg er
commercial market. In addition to expanding their internal research
and development (R&D) programs and collaborations with leading
research institutes and universities, another way the largest
defense companies might maintain their competitiveness in th e
emerging technology market is through investments and mergers
and acquisitions (M&A). If done correctly, these approaches may
give these defense giants a leg up against competitors that
predominantly rely on in -house R&D. Looking specifically to the
U.S. defense innovation ecosystem, major defense companies that
invest in or acquire AI companies could potentially serve as a
bridge between DOD and the commercial innovation ecosystem. I n
doing so, the se companies might help the U.S. military adapt and
lever age commercial technology for defense applications.
Within this context, this paper looks at the state of AI investments
and M&A by the top 50 global defense companies —as determined
by their military revenue —to further understand their use of these
approa ches to access external AI innovation. Our key findings
include the following:
● Few of the top 50 global defense companies are investing in
or acquiring privately -held AI companies . This suggests that

Center for Security and Emerging Technology | 2 these companies are not relying on these approaches to
access AI technology in the private sector .
● Defense companies that have a corporate venture capital (CVC) subsidiary have invested more in AI companies than
those without such organizations. These CVC subsidiaries also tend to make more AI investments than their parent companies.
● The largest global defense companies often bought and invested in AI companies based in the United States.
Despite concerns about foreign entities leveraging American
innovation, within the defense industry, U.S. -based AI
companies are still more likely to receive investments from U.S.-based defense companies.

Center for Security and Emerging Technology | 3 Table of Contents
Executive Summary ........................................................................................ 1
Introduction ....................................................................................................... 4
Understanding the AI Investment and M&A Activities of the
Largest Global Defense Companies .......................................................... 6
The Role of Corporate Venture Capital Subsidiaries ............................ 9
Investing and Buying Within U.S. Borders ............................................ 12
Conclusion ....................................................................................................... 14
Authors ............................................................................................................. 16
Acknowledgments ........................................................................................ 16
Appendix 1: Top 50 Defense Companies and Their Defense
Revenue in 2019 ........................................................................................... 17
Appendix 2: Methodology and Data ....................................................... 20
Appendix 3: Domestic and International AI M&A and Investment
Activity .............................................................................................................. 21
Appendix 4: Defense Corporate Venture Capital Subsidiaries ....... 22
Endnotes .......................................................................................................... 23

Center for Security and Emerging Technology | 4 Introduction
The major global defense companies are significant suppliers and
integrators of high -tech capabilities for militaries around the world,
including the U.S . military.2 As the rhetoric around the importance
of AI to military superiority ramps up across the g lobe, it is vital to
understand the state of AI innovation among these leaders of the
defense industry.
Major global defense companies such as Northrop Grumman and Boeing increasingly offer technology hardware and services
alongside their traditional delivery of aerospace products and
conventional military systems. The cutting -edge advances in
emerging technologies such as AI, however, are predominantly taking place in the commercial space. While expanding in -house
research and development (R&D) efforts an d broadening
collaborations with leading universities are important paths for
staying competitive, defense giants must also be able to access
commercial innovation.
One potential pathway by which major defense companies can
access the commercial innovation base is through private equity
investments and mergers and acquisitions.
3 Large U.S. -based
defense industry players such as Lockheed Martin, for example, have “been on a mission to create partnerships [e.g., investments in
AI startups] and get access to certain types of AI technology ,”
executive director and general manager of Lockheed Martin
Ventures Chris Moran emphasized in 2020.
4 Other major
international defense companies appear to have followed a similar
approach —for example, according to the company’s website,
Netherlands/France -based Airbus is “interested in those
[tech nology] start- ups that operate in areas of strategic interest to
the Group [and] investing in . . . a vision where humans and AI
together create solutions that guarantee more efficiency and safety in the aerospace sector. ”
5 If leveraged properly, the inve stment and
M&A approaches have the potential to help these large defense industry players expand their emerging technologies portfolio s as
well as maintain market relevance in the broader commercial AI
innovation space.
Center for Security and Emerging Technology | 5 This paper is a first step, intended to assess the degree to which
the largest global defense companies use investment and M&A
approaches to access AI technology from smaller, privately -held
companies —that is, companies not traded publicly on the stock
market exchanges. By investing in or ac quiring privately -held AI
companies, large defense companies may be seeking to capitalize
on the speed and agility characteristics of tech startups, cultivate
talent, and help shape emerging technologies for commercial and
defense applications.6 But the investment and M&A approach es
are not without limitations —for example, investing in or acquiring a
company does not necessarily guarantee successful integration of relevant technologies.
7 A more comprehensive assessment of
defense companies’ AI capabilities would also need to account for
other mechanisms such as internal research through industrial
research and development (IRAD) investments, investments
directly into universities, or subcontract relationships. These limitations notwithstanding, a closer look into the investment and
M&A activity of the major global defense companies can still
provide meaningful insights into their efforts to access AI
innovation from private markets for use in next- generation defense
systems.
With that, this paper focuses specifically on the AI investment and
M&A activities of the top 50 global defense companies —as
determined by military revenue —assessing the investment
patterns of their corporate venture capital subsidiaries (where such
exist), as well as the geographic breakdown of these defense companie s and their AI target companies.
8
Center for Security and Emerging Technology | 6 Understanding the AI Investment and M&A Activities of
the Largest Global Defense Companies
As the commercial sector has forged ahead in AI innovation,
militaries around the world, including the U.S. DOD, are
increasin gly looking outside of the traditional military -industrial
relationship and toward nontraditional suppliers of emerging
technologies such as tech startups, creating linkages through government programs such as the U.S. Defense Innovation Unit
(DIU).
9 To stay relevant and remain ahead of their competitors,
large defense companies are also trying to tap into AI technologies
being developed in the commercial space, including through the
investment and M&A approach es. Major defense companies have
the benefit o f experience navigating government and military
bureaucracies, an understanding of warfighters’ needs, and the
know- how to identify those cutting -edge technologies that can be
effectively integrated into combat systems. As such, some of these
long -time traditional suppliers see their investments in privately -
held AI companies not only as a way to diversify their emerging technologies portfolio, but also as an opportunity to “act as a
translator” between the fast- paced world of commercial innovation
and the rigid bureaucracy of military acquisition.
10
To better understand the degree to which the largest defense
companies are accessing external AI innovation, we analyzed the
top 50 global defense companies’ investment and M&A activities in
private AI markets from 2013 to 2020. These global defense giants span across Europe, Asia, and the United States; their cumulative
revenue in 2019 amounted to $1.197 trillion, including $475 billion
in defense revenue.
11 The time frame for our analysis corresponds
to big AI breakthroughs, driven in large part by progress in deep learning and machine learning methods in late 2012.
12 To identify
AI target companies specifically, we ran a keyword- based search
query against business descriptions provided by CSET’s financial databases.
13 Appendix 2 offers further detail on the methodology
and the data used in this paper.
Our analysis shows that between 2013 and 2020, 11 of the top 50
global defense companies made a total of 52 investment
transactions into AI companies with $1.06 b illion in disclosed
Center for Security and Emerging Technology | 7 value.14 Over the same period of time, five de fense companies
struck M &A deals with six AI comp anies, with one de al disclosing a
transaction value of $350 million.15 Only two of the top 50 global
defense companies—Huntington Ingalls Industri es and Boe ing—
made both AI investments and M&A deals. These trends show that
few of the major global defense companies are investing in or
acquiring privately-h eld AI companies.
A number of factors c an help expl ain wh y the largest global
defense companies seem to rarely use the investment and M&A
approaches to access AI innovation in the private sector. For one,
some of these major defense industry players may not believe A I is
mature enough for integration in to embedded systems an d
products, or for investment with high financial returns at this point
in time.16 It is also possible that simple subcontract relationships on
a project-by-project b asis o r internal d evelopment o f integrated AI
are easier approaches to manage. While be yond the sc ope of th is
paper, data on subcontracts and IRAD investments can provide
further insights.
While the data show s that the majority of the world’s top 50
defense companies have n ot invested in or dir ectly ac quired AI
companies, those that did made significant investments. More
specifically, th e 11 global defense compani es th at made
investments into privately -held AI companies between 2013 and
2020 dedicated a quarter of their total investments to these
ventures. It is also worth noting that 65 percent of these AI
investments are spread across ten defense companies ( seve n of
which ar e U.S.-based companies), while th e rest came so lely f rom
the Dutch/French Airbus which stands out as more active than
other de fense comp any investors. Airbus sources its revenue
primarily f rom commercial markets, and therefore may be be tter
positioned to spread its AI investments internationally.17 These
results indicate that a sizable number of the AI investment
transactions analyzed in this paper ar e clustered i n U.S.-based
defense companies, and that most of the major defense companies
outside of the United States, excepting Airbus, are not leveraging
private equity investments to access AI companies in the private
sector.
Center for Security and Emerging Technology | 8 Figure 1: Total To p Global Defense Company AI and Non -AI
Investments and Mergers & Acquisitions (M&A), 2013-2020.
As Figure 1 illustrates, mergers and acquisitions as a method to
access external AI resources seems even less common than private
equity investments. Between 2013 and 2020, only five defense
companies —four based in the U nited States and one in the U nited
Kingdom—used this approach to access private -sector AI
technology. Each of the six transactions made by these five major
defense companies targeted AI companies based in the United States. Moreover, of the five defense companies that used
acquisitions of any sort, two —Huntington Ingalls and United
Technologies —rarely made either investment or M&A deals during
the period of time we examined. However, when these two
companies did acquire other firms , half of the deals were with an
Source: Analysis by CSET using Crunchbase and Refinitiv.
Center for Security and Emerging Technology | 9 AI company. Among other reasons, major defense companies may
be reluctant to pursue AI M&A deals due to the challenges that
come with strategic acquisitions, including the difficulties and costs
of identifying targets that are financially sound and possessing
valuable technology .18 Private equity investment strategies, on the
other hand, appear more favorable to investors, in part because
these strategies allow them to scope out opportunities with lower
risks than acquiring a company.19
The Role of C orporate Venture Capital Subsidiaries
One major difference between defense companies that made AI
investments and those that did not is the presence of a corporate
venture capital (CVC) subsidiary. In fact, as we elaborate below, the majority of the top defense companies’ AI investment activity
between 2013 and 2020 can be traced back to these CVC subsidiaries , rather than the defense companies themselves.
CVC organizations can serve as intelligence gatherers, helping a company understand its competitors and scan for emerging
technologies such as AI that are developing rapidly.
20 By
establishing a CVC division, a large defense company may also be
signaling an interest in obtaining these cutting -edge technologies
which they may later integrate into larger defense systems and platforms.
21 For example, Lockheed Martin established Lockheed
Martin Ventures to “tap into these startups, and ultimately serve as a [market/ bridge] for the emerging technology being created outside the walls of the defense industry.”
22 One of the key
functions Lockheed Martin Venture performs is screening up to 1,000 startups annually.
23 Other defense players such as
Honeywell have also set up their own CVC organizations to proactively engage in venture capital investments in emerging technologies.
24
Thirteen of the top 50 global defense companies have a CVC subsidiary ( see Appendix 4).
25 Between 2013 and 2020, 11 of
these 13 CVC subsidiaries made investments in a variety of companies, and eight of those 11 invested in AI companies.
26 As
Figure 2 demonstrates, of the 52 AI investment transactions
examined in the previous section , 95 percent (49 transactions)
Center for Security and Emerging Technology | 10 involved the eight defense companies that have CVC sub sidiaries,
amounting to around $1 billion in d isclos ed value. By contrast, the
three defense companies without CVC organizations made three
investment transactions into privately -held AI companies wh ich
totaled $30.5 millio n in disc losed value. I n other words, defense
companies with CVC s ubsidiaries mad e mo re investments into AI
companies than those major defense firms without corporate
venture c apital divisions.
Figure 2: Investments in AI and Non -AI by Eleven Defense
Companies w ith and without V enture Capital Subsidiaries ( CVC),
2013-2020.
Source: Analysis by CSET using Crunchbase and Refinitiv.
We further parsed the investment activity of defense companies
with CVC subsidiaries by parent -subsidiary relationship—treating
the defense company as the parent and the CVC organization as
the subsidiary —to compare their investment trends. Of the eight
defense companies with CVC subsidiaries that made investments
into AI companies , five had both themselves (as parent companies)
and their CVC subsidiaries make investments into AI companies, while three defense companies relied exclusively on their

Center for Security and Emerging Technology | 11 subsidiaries to invest in AI -related ventures. To be clear, over the
period of time under our rev iew, the parent companies have made
investments in a variety of companies, but they did not prioritize
investments into AI companies as much as their CVC subsidiaries
did. As Figure 2 demonstrates, CVC subsidiaries dedicated 27
percent of their total inves tment transactions to AI companies,
while their parent companies committed only about 9 percent of
their total investments to AI.
Looking more closely into the role of CVC subsidiaries also revealed a particularly interesting insight: between 2013 and 2020,
the majority of AI investments came from CVC subsidiaries rather than the major defense companies themselves. Specifically, 92
percent (45 investment transactions) of AI investments were
conducted by CVC subsidiaries such as Airbus Venture and
Honeywell Venture Capital, compared to the 8 percent ( four
investment transactions) made by parent companies, namely
defense leaders such as Airbus and Honeywell.
In sum, establishing a CVC subsidiary may become a real
advantage for the major defense industry playe rs that are
interested in accessing private -sector AI technology. It is unknown,
though, if and how these major defense companies leverage and
integrate the capabilities of the AI companies invested in by the
CVC subsidiaries. Establishing this with certainty requires firms’
internal data, which is beyond the scope of this paper.

Center for Security and Emerging Technology | 12 Investing and B uying Within U.S. Borders
The majority of private equity AI investments made by the 11
major global defense companies between 2013 and 2020 was
concentrated in the United States. This finding is perhaps not
surprising considering that the United States has the world’s
largest investment market for AI companies.27 Figure 3 shows that
AI target companies based in the United States attracted 79 percent of the AI investment transactions from the major defense
companies, while Israeli ( 10 percent), French ( 4 percent), Canadian
(4 percent ), Swiss ( 2 percent), and Indian ( 2 percent ) AI target
companies accounted for the rest. Similarly, the five defense
companies with AI M&A activity exclusively bought American AI
companies.
Figure 3: U.S. -based AI Companies are the Top 50 Global Defense
Companies’ Primary AI Investment Targets, 2013- 2020.

Source: Analysis by CSET using Crunchbase and Refinitiv.
Not only do U.S.-based AI companies tend to attract the majority of
AI investmen ts made by the major global defense companies, U.S. -
based defense companies predominantly invested in U.S. -based AI
companies. American defense companies such as Lockheed Martin
and Honeywell accounted for over 60 percent of investments (25
transactions) i nto U.S. -based AI target companies, with the rest of

Center for Security and Emerging Technology | 13 the transactions tracing back to the Dutch/French giant, Airbus, (37
percent/15 transactions) and the South Korean leading defense
company, Hanwha ( 3 percent/1 transaction). Similarly, in our
findings fo r the AI M&A activity of the largest global defense
companies, of the six U.S. -based AI companies acquired, two
struck a deal with BAE Systems, a UK -based defense company,
and four were bought by U.S. -based defense companies. These AI
investment and M&A pa tterns may moderate some recent
concerns that foreign entities —especially those affiliated with the
militaries of U.S. competitors and adversaries such as China—are
investing in and buying U.S. -based AI companies.28
U.S. innovation in the commercial sector may have the potential to
help bolster U.S. defense systems. As the majority of AI investments and M&A made by the largest global defense
companies remain within U.S. borders, it is crucial for the United
States to continue fostering a vibrant innovation ecosystem and AI private markets at home. Small AI companies and startups based in
the U nited States may be the driving force of AI advances and
breakthroughs. However, in order for the AI -enabled capabilities
developed in the commercial sector to become usable in fielded
military systems and platforms, traditional defense companies are
often needed to build and integrate them into large, complex
systems.
29 As important suppliers and integrators, the major
defense companies have shown interest in accessing AI -enabled
capability from AI companies in the private sector . For example,
Lockheed Martin’s investment in Fiddler, a company specializing in
AI explainability, may help the defense giant develop trustworthy
AI systems.30 There is potential for the major defense companies to
capitalize on American innovation in the commercial sector. However, as shown in this paper, the major global defense
companies are not currently leveraging investment and M&A as
significant tools to harness AI -enabled techn ology in the private
sector.

Center for Security and Emerging Technology | 14 Conclusion
The top 50 global defense companies play a critical role as
suppliers and integrators of essential capabilities, including AI -
enablers, into fielded military systems. As militaries around the
world, including t he U.S. Department of Defense, continue to
prioritize AI, it is necessary to understand the state of AI capabilities and capacity within the major global defense
companies.
Analyzing AI investment and M&A trends involving the top 50
global defense companies provides insights into the reality of
access to commercial AI by the leading suppliers of defense
systems and platforms. To summarize, our key findings are as
follows:
● The top 50 global defense companies conducted a relatively
small amount of AI investm ent o r M&A activity, suggesting
they do not rely heavily on these approaches to access AI
technology in the private sector.
● Defense companies that have a corporate venture capital (CVC) subsidiary more frequently invest in AI companies
than those without such organizations. These CVC
subsidiaries also tend to make more AI investments than their parent companies.
● The largest global defense companies often bought and invested in AI companies based in the United States. Despite concerns about entities associ ated with foreign
militaries leveraging American innovation, within the defense industry, U.S. -based AI companies are still most
likely to receive investments from U.S. -based defense
companies.
The findings presented in this paper suggest that there is lit tle AI
investment and M&A activity initiated by the largest global defense companies since the major AI/ML breakthroughs in late 2012. It is
important to understand that the lack of dependency on
investment and M&A to access commercial AI technology is not equivalent to the absence of AI capabilities and capacity within the

Center for Security and Emerging Technology | 15 major defense companies. It is possible that major global defense
companies are accessing AI either using subcontract relationships
on a project -by-project basis or by developing integra ted AI
internally . It is also possible that major global defense companies
may not believe AI is mature enough for integration into embedded
systems and products at this point, or that defense company investors are perhaps not ready to tolerate the risk an d uncertainty
of investment returns associated with emerging technologies and early -stage investment.
Beyond the assessment of AI investment and M&A activities in the private sector, there are other mechanisms that should be further analyzed to achieve a comprehensive understanding of the current
state of AI capabilities and capacity within the major global defense companies. For instance, having a corporate venture
capital subsidiary appears to be a real advantage for the largest
defense companies in acce ssing external AI technology in the
private sector. These defense companies should further examine
not only the magnitude of the ir subsidiaries’ investments into AI
privately -held companies, but also how well the acquired
companies’ technology has been int egrated into the parent
company . Such findings may prove to be significant for the defense
companies to decide on whether to ramp up or scale down their investment and M&A efforts to, in part, access AI innovation in the
private sector. For the U.S. DOD, conducting internal research on
IRAD investments or major defense companies’ subcontract
relationships may provide a more comprehensive view of the AI
acquisition and integration capabilities useful to defense systems.

Center for Security and Emerging Technology | 16 Authors
Ngor Luong is a research analyst with CSET, where Rebecca Gelles
is a data scientist and Melissa Flagg wa s a senior fellow.
Acknowledgments
Thanks to Catherine Aiken, David Bonfili, Jaymie Durnan, Zigfried
Hampel- Arias, Margarita Konaev, and Igor Mikolic -Torreira for
helpful feedback, Ilya Rahkovsky for technical assistance, Dale
Brauner, Melissa Deng, and Alex Friedland for editorial support, as
well as Farhana Hossain for help with data visualization. The authors are solely responsible for the views expressed in this piece and for any errors.

© 2021 by the Center for Security and Emerging Technology. This
work is licensed under a Creative Commons Attribution -Non
Commercial 4.0 International License.
To view a copy of this license, visit
https://creativecommons.org/licenses/by -nc/4.0/
.
Document Identifier: doi: 10.51593/ 20210015

Center for Security and Emerging Technology | 17 Appendix 1: Top 50 Defense Companies and Their
Defense Revenue in 2019
This appendix includes the top 50 global defense companies
analyzed in this report , ranked according to their defense revenue ,
and lists their 2019 total revenue, def ense revenue—that is,
revenue from their defense divisions —and proportion of defense
revenue to total revenue.
Rank Company Country 2019
Defense
Revenue (in
millions) 2019 Total
Revenue (in
millions) Proportion of
Defense
Revenue
1 Lockheed Martin United States $56,606.00 $59,812.00 95%
2 Boeing United States $34,300.00 $76,559.00 45%
3 General Dynamics United States $29,512.00 $39,350.00 75%
4 Northrop Grumman United States $28,600.00 $33,841.00 85%
5 Raytheon Company United States $27,448.00 $29,200.00 94%
6 Aviation Industry
Corporation of China China $25,075.38 $66,858.02 38%
7 BAE Systems United
Kingdom $21,033.27 $23,370.30 90%
8 China North Industries
Group Corporation Limited China $14,771.60 $68,074.15 22%
9 L3Harris Technologies United States $13,916.98 $18,074.00 77%
10 United Technologies Corp. United States $13,090.00 $77,000.00 17%
11 China Aerospace Science
and Industry Corporation China $12,035.25 $37,610.17 32%
12 Airbus Netherlands/
France $11,266.57 $78,916.36 14%
13 Leonardo Italy $11,109.27 $15,429.55 72%
14 China Shipbuilding
Industry Corporation China $11,019.56 $55,097.78 20%
15 China Electronics
Technology Group China $10,148.87 $32,951.25 31%
16 Thales France $9,251.68 $20,596.61 45%

Center for Security and Emerging Technology | 18 17 Almaz -Antey Russia $9,191.60 $9,651.71 95%
18 China South Industries
Group Corporation China $8,845.87 $28,550.02 31%
19 Huntington Ingalls
Industries United States $8,119.00 $8,899.00 91%
20 China Aerospace Science
and Technology
Corporation China $7,745.57 $36,223.21 21%
21 Mitsubishi Heavy
Industries Japan $6,570.00 $37,670.00 17%
22 Dassault France $5,708.84 $8,171.48 70%
23 Leidos United States $5,364.00 $11,094.00 48%
24 China State Shipbuilding
Corporation China $5,356.75 $33,495.61 16%
25 Honeywell United States $5,326.00 $36,709.00 15%
26 Booz Allen Hamilton United States $5,182.96 $7,463.84 69%
27 Rolls -Royce United
Kingdom $4,712.36 $19,725.28 24%
28 Safran France $4,413.05 $27,581.55 16%
29 GE Aviation United States $4,400.00 $32,875.00 13%
30 Naval Group France $4,155.14 $4,155.14 100%
31 Elbit Systems Ltd. Israel $4,056.00 $4,508.00 90%
32 Hanwha South Korea $3,976.23 $42,900.00 9%
33 Rheinmetall AG Germany $3,942.46 $7,001.73 56%
34 CACI International Inc. United States $3,489.85 $4,986.34 70%
35 Tactical Missiles
Corporation JSC Russia $3,474.90 $3,546.46 98%
36 SAIC United States $3,317.08 $6,379.00 52%
37 Perspecta Inc. United States $3,300.00 $4,504.00 73%
38 Textron Inc. United States $3,271.20 $13,630.00 24%
39 Babcock International United
Kingdom $3,233.92 $6,220.17 52%
40 Saab AB Sweden $3,185.19 $3,747.29 85%
41 Israel Aerospace Industries
Ltd. Israel $3,006.00 $4,108.00 73%
42 KBR United States $2,852.62 $5,639.38 51%

Center for Security and Emerging Technology | 19 43 KNDS Netherlands $2,798.45 $2,798.45 100%
44 Rafael Advanced Defense
Systems Ltd. Israel $2,746.65 $2,746.65 100%
45 Hindustan Aeronautics Ltd. India $2,710.00 $3,010.00 90%
46 Amentum United States $2,700.00 $4,100.00 66%
47 Bechtel United States $2,303.00 $21,800.00 11%
48 Aselsan A.S. Turkey $2,172.57 $2,290.61 95%
49 Jacobs United States $2,115.00 N/A N/A
50 Oshkosh Defense United States $2,032.00 $8,382.00 24%

Center for Security and Emerging Technology | 20 Appendix 2: Methodology and Data
Identifying global defense companies : We select ed a list of the top
50 global defense companies based on their defense revenue in
2019 using Defense News’ Top 100 list, compiled by Defense News and the International Institu te for Strategic Studies.
31
Appendix 1 provides more detail on the selected companies and their defense revenue.
Identifying AI investments and M&A : We supplement ed
Crunchbase data with data from Refinitiv to identify all private
equity investment and M&A transactions made by the top 50
global defense companies. We limited the data to 2013 to 2020 to
accommodate the big AI breakthroughs and a surge in deep
learning and machine learning in late 2012 and the inclusion of
Refinitiv data after 2012. In this pap er, M&A refers to investment
transactions with 100 percent of the target company’s equity sold,
while private -market investments include venture capital and
private equity funding rounds. Therefore, we excluded transactions
where the investment target is c lassified in Crunchbase as “Post -
IPO” or “Grant.” In this paper, we did not attempt to identify
undisclosed M&A transactions and thus, excluded deals that are
labeled “Intended,” “Pending,” “Rumor,” “Withdrawn,” or
“Unknown” in Refinitiv. These restrictions allow us to meaningfully
capture the investment and M&A trends by the global defense
companies with higher confidence.
To identify AI companies, we ran a regular expression -based
search query against business descriptions of the target companies provide d by Crunchbase and Refinitiv.
32

Center for Security and Emerging Technology | 21 Appendix 3: Domestic and International AI M&A and
Investment Activity
Source: Analysis by CSET using Crunchbase and Refinitiv.

Center for Security and Emerging Technology | 22 Appendix 4: Defense Corporate Venture Capital
Subsidiaries
The following table contains the name of defense companies and
their corporate venture capital subsidiaries , as well as the country
in which they are headquartered/founded.
Defense Company Corporate Venture Capital Subsidiary Country
Airbus Airbus Venture Netherlands/France
BAE Systems BAE Systems Ventures33 United Kingdom
Boeing Boeing HorizonX Ventures United States
China Aerospace Science and
Industry Corporation CASIC Capital China
Hanwha Hanwha Investment Corp South Korea
Honeywell Honeywell Venture Capital United States
Lockheed Martin Lockheed Martin Ventures United States
Rafael Advanced Defense
Systems Ltd. Rafael Development Corporation Israel
Saab AB Saab Ventures Sweden
Safran Safran Corporate Ventures France
SAIC SAIC Venture Capital United States
China South Industries Group
Corporation SIAMC Management Co., Ltd. China
Thales Thales Corporate Ventures France

Center for Security and Emerging Technology | 23 Endnotes

1 “The Final Report,” National Security Commission on Artificial Intelligence, Final
Report (Washington, DC: NSCAI , March 2021) , 7, https://www.nscai.gov/wp -
content/uploads/2021/03/Full -Report -Digital- 1.pdf .
2 Melissa Flagg and Jack Corrigan , "Ending Innovation Tourism : Rethinking the
U.S. Military’s Approach to Emerging Technology Adoption " (Center for Security
and Emerging Technology, July 2021), 4 –5,
https://cset.georgetown.edu/publication/ending -innovation -tourism/ .
3 In this paper, mergers and acquisitions refer to investment transactions with
100 percent of the target company’s equity sold. In our analysis, we grouped
mergers and acquisitions together and focused on transactions that involve
majority own ership. Investments include venture capital and private equity
funding rounds. We excluded transactions where the target was classified by
Crunchbase as Post -IPO or G rant. See Zachary Arnold, Ilya Rahkovsky, and Tina
Huang, “Tracking AI Investment: Initial Findings from the Private Markets”
(Center for Security and Emerging Technology, September 2020 ),
https://cset.georgetown.edu/research/tracking -ai-investment/ .
4 Marjorie Censer , “Lockheed Martin Ventures invests in Fiddler ,” Inside Defense,
August 12, 2020, https://insidedefense.com/insider/lockheed -martin -ventures -
invests -fiddler .
5 “Artificial Intelligence,” Airbus, December 6, 2016,
https://www.airbus.com/newsroom/news/en/2016/12/Artificial -Intelligence.html .
6 Chris Moran, “Lockheed Martin seeks investments not acquisitions in dual -use
technology startups,” Lockheed Martin, July 2020,
https://ww w.lockheedmartin.com/en -us/news/features/2020/the -win-win-of-
corporate -backed -funds.html ; see further Thomas J. Chemmanur and Elena
Loutskina, “The Role of Venture Capital Backing in Initial Public Offerings:
Certification, Screening, or Market Power? ,” EFA 2005 Moscow Meetings Paper
(September 2006): 7 –8, http://dx.doi.org/10.2139/ssrn.604882 ; Adil Khan, Steve
Beckey, and Jim Adams, “After the Shock: Implications for M&A in the aerospace
& defense ma rket” (KPMG, 2020) , https://advisory.kpmg.us/articles/2020/after -
shock -implications -ma-aerospace -defense -market.html .
7 Josh Lerner, “Corp orate Venturing,” Harvard Business Review, October 2013,
https://hbr.org/2013/10/corporate -venturing ; Donald DePamphilis, Mergers and
Acquisitions Basics: All You Need To Know (Cambridge, MA: Academic Press ,
October 2010) , 43–44; Previous examples of major defense companies buying
cyber firms but failing to effectively incorporate their employees and products
into the larger company show the limits of the M&A element in particular, Aaron

Center for Security and Emerging Technology | 24
Mehta, “The great industrial competition: Mergers, acquisitions and geopolitical
events fuel revenue,” Defense News , July 22, 2019,
https://www.defensenews.com/top -100/2019/07/22/the -great -industrial -
competition -mergers -acquisitions -and-geopolitical- events -fuel-revenue/ .
8 “Top 100 for 2020,” Defense News , 2020,
https://people.defensenews.com/top -100/ . The top 50 global defense companies
were selected based on their defense revenue. See Appendix 1 for additional
details.
9 Flagg an d Corrigan , "Ending Innovation Tourism."
10 Loren Thompson, “Raytheon And BAE Systems Are Drawing Nontraditional
Suppliers Into Defense,” Forbes , January 24, 2020,
https://www.forbes.com/sites/lorenthompson/2020/01/24/how -top-military -
contractors -raytheon -and-bae-systems -are-drawing -non- traditional- suppliers -
into-defense/?sh=30a8abb06af2 .
11 In this paper, we categorized the top 50 global defense companies’
geographic location based on the location of their headquarters.
12 Md Zaha ngir Alom , Tarek M. Taha, Chris Yakopcic, and Stefan Westberg , et
al., “The History Began from AlexNet: A Comprehensive Survey on Deep
Learning Approaches,”arXiv preprint arXiv:1803.01164 (2018), https://arxiv.org/pdf/1803.01164.pdf
.
13 For more details on the methodology, see Arnold, Huang, and Rahkovsky,
“Tracking AI Investment,” 33; replication data and code are available at
https://github.com/georgetown -cset/global -defense -companies .
14 The investment disclosed value refers to the amount raised by a company
during a particular series of funding.
15 Of the 6 M&A deals, 5 kept their transaction value confidential.
16 Jacques Bughin, Eric Hazan, Sree Ramaswamy, and Michael Chui et al.,
“Artificial Intelligence: The Next Digital Frontier?” ( McKinsey Global Institute,
June 2017) , 35,
https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electroni
cs/our%20insights/how%20artificial%20in telligence%20can%20deliver%20real
%20value%20to%20companies/mgi -artificial- intelligence -discussion -
paper.ashx .
17 See appendix 3 for details.

Center for Security and Emerging Technology | 25
18 Michael Richter, “Defense M&A is hot — but where are the targets? ,” Defense
News , July 17, 2018, https://www.defensenews.com/newsletters/daily -news -
roundup/2018/07/17/defense -ma-is-hot-but-where -are-the-targets/ ; Matt
Aaronson, Doug Belair, Paul DeLia, and Drosten Fisher et al., “Building
Beachheads in the US Defense Market Through M&A ,” Boston Consulting
Group, July 23, 2020, https://www.bcg.com/publications/2020/building -
beachheads -us-defense -market -through -mergers -acquisitions .
19 Aaron Mehta, “Boeing’s venture fund boss talks venture capital and growing
defense investments,” Defense News , January 30, 2020,
https://www.defensenews.com/smr/cultural -clash/2020/01/30/boeings- venture -
fund -boss -talks -venture -capital -and-growing -defense- investments/ .
20 Lerner, “Corporate Venturing” ; Gary Dushnitsky and Michael J. Lenox, “When
does corporate venture capital investment create firm value?,” Journal of
Business Venturing 21, no. 6 (November 2006): 757; Doug Cameron, “Defense
Industry Adds Venture Capital to Its Arsenal,” The Wall Street Journal, July 5,
2018, https://www.wsj.com/articles/defense -industry -adds -venture -capital- to-
its-arsenal -1530792001 .
21 Mehta, “Boeing’s venture fund boss talks venture capital and growing defense
investments.”
22 Moran, “Lockheed Martin seeks investments not acquisitions in dual -use
technology startups ”; brackets in the original.
23 Theresa Hitchens, “Lockheed Martin Ventures Scouts Next -Gen AI/ML Tech ,”
Breaking Defense, August 11, 2020,
https://breakingdefense.com/2020/08/lockheed -martin -ventures -scouts -next -
gen-ai-ml-tech/ .
24 Michael Vizard, “Honeywell lays down $1.3 billion to drive AI and IoT into life
sciences,” VentureBeat, December 23, 2020,
https://ventu rebeat.com/2020/12/23/honeywell -lays-down -1-3b-to-drive -ai-
and-iot-into-life-sciences/ .
25 BAE Systems Ventures is inactive. See “BAE Systems Ventures,” Pitchbook,
accessed May 27, 2021, https://pitchbook.com/profiles/investor/123753 -97.
26 In this paper, we sorted the 52 investment transactions made by these 11
defense companies based on whether or not the company investor has
established a CVC division.

Center for Security and Emerging Technology | 26
27 In 2019, privately held AI co mpanies attracted nearly $40 billion in disclosed
equity investment. See further Arnold, Huang, and Rahkovsky, “Tracking AI
Investment,” 7.
28 For example, Chinese investments into U.S. -based privately -held AI
companies have come with the goal of technology transfer, and Chinese defense
companies with military contracts unquestionably hope to harness AI technology
obtained through investments for military advantage. See e.g., William Hannas
and Huey -Meei Chang, “China’s Access to Foreign AI Technology: An
Assessment” (Center for Security and Emerging Technology, September 2019) ,
https://cset.georgetown.edu/publication/chinas -access -to-foreign -ai-
technology/ ; Michae l Brown and Pavneet Singh, “China’s Technology Transfer
Strategy: How Chinese Investments in Emerging Technology Enable A Strategic
Competitor to Access the Crown Jewels of U.S. Innovation” (Defense Innovation
Unit Experimental, January 2018 ),
https://admin.govexec.com/media/diux\_chinatechnologytransferstudy\_jan\_2018
\_(1).pdf ; Andrew Zalesk i, “Lockheed Martin invests millions in defense start- ups
to fast- track R&D ,” CNBC , November 2, 2017,
https://www.cnbc.com/2017/10/31/lockheed -martin -places -big-bets -on-
defense- start- ups.html ; in this paper, we did not attempt to identify undisclosed
investment transactions unavailable in commercial datasets. Moreover, our analysis only focuses on the top 50 global defense companies, not smaller
companies with military contracts. While there are companies with milita ry
contracts investing in AI companies, we leave this to future research.
29 Flagg and Corrigan, “Ending Innovation Tourism ”; Zalesk i, “Lockheed Martin
invests millions in defense start -ups to fast -track R&D.”
30 Hitchens, “Lockheed Martin Ventures Scouts N ext-Gen AI/ML Tech.”
31 “Top 100 for 2020.”
32 For more details on the methodology, see Arnold, Huang, and Rahkovsky,
“Tracking AI Investment,” 33; replication data and code are available at
https://github.com/georgetown -cset/global -defense -companies .
33 BAE Systems Ventures is currently inactive. See note 2 5 above.