Which APAC governments are spending most on AI defense technology in 2026?

Japan leads the APAC AI defense investment cycle after the Diet approved the doubling of defense spending to 2% of GDP, with the full ramp reaching approximately ¥10 trillion annually by 2027. The three defense buildup programs most relevant to AI procurement are the standoff missile capability expansion (requiring autonomous targeting AI), the cross-domain defense capability (requiring multi-domain AI command and control), and the joint operations capability enhancement (requiring battlefield intelligence AI). South Korea ranks second by AI defense procurement volume, with the ADD (Agency for Defense Development) running active AI programs across autonomous unmanned systems, AI-guided missile systems, and AI electronic warfare. Australia's AI defense investment is smaller in absolute terms but structurally significant because AUKUS creates a framework for Australian defense AI companies to access US and UK government procurement, extending the effective addressable market for Australian-origin AI defense technology well beyond the ADF budget.

What cross-border restrictions affect AI defense M&A in the Asia Pacific region?

Three regulatory frameworks create meaningful transaction complexity for AI defense M&A in APAC. First, ITAR (International Traffic in Arms Regulations) applies to US-origin defense technology and controls who can acquire or receive ITAR-controlled items, including software and data. An AI defense company that has developed technology on ITAR-controlled components cannot be sold to a non-US person without a license. This is the most common deal-stopper in cross-border AI defense transactions involving US-origin technology and APAC acquirers. Second, FATA (Foreign Acquisitions and Takeovers Act) in Australia applies to defense or critical infrastructure businesses, requiring FIRB approval for foreign investment and potentially blocking acquisitions by state-linked acquirers from certain jurisdictions. Third, Korea's defense industry promotion act requires Ministry of National Defense approval for transactions involving registered defense companies, and prohibits certain categories of foreign ownership in companies developing sensitive defense technology. For dual-use AI companies — those building commercial AI that also has defense applications — the restrictions are narrower but depend on how the company has structured its government relationships.

What revenue multiples apply to AI defense companies in acquisition transactions?

AI defense companies trade at a meaningful premium to commercial AI companies when the revenue is genuinely defense-contracted rather than dual-use commercial. Pure defense AI platforms with multi-year government contracts (cost-plus or IDIQ structures) trade at 8-15x revenue, reflecting the predictability and low churn of government revenue but discounting for single-customer concentration and the compliance overhead of defense contracting. Defense AI companies with commercial revenue alongside government contracts command 12-20x ARR on the commercial portion, with the government revenue providing a strategic anchor that supports a higher blended multiple. Dual-use AI companies where defense is one application among several are typically valued primarily on the commercial revenue, with the defense relationship treated as a strategic option rather than the primary valuation driver — unless the government revenue is dominant. The most important variable is competitive position: AI defense companies with a unique technical capability (proprietary sensor fusion, denied-GPS navigation, specific adversarial threat detection) command top-of-range multiples. Companies that are competing on price or integration services rather than core AI capability receive the lowest multiples.

Which APAC AI defense companies are most likely acquisition targets in 2026?

Advanced Navigation stands out as the most acquisition-ready APAC-native AI defense company. The company's AI-inertial navigation systems for denied-GPS environments are used by the Royal Australian Navy, undisclosed NATO member forces, and commercial applications ranging from autonomous vehicles to mining robotics. The technology — which uses AI to fuse sensor data and maintain navigation accuracy when GPS is jammed or unavailable — is directly relevant to the threat environment that APAC militaries are planning for, and the technology is not easily replicated. Potential acquirers include BAE Systems, Thales, SAAB, and L3Harris, all of which have APAC defense programs that could benefit from denied-GPS navigation capability. Among US-origin AI defense companies with significant APAC footprints, Shield AI is the most likely acquisition target. The company has demonstrated autonomous mission capability in contested environments, has partnerships with APAC air forces, and has reached a scale where a defense prime acquisition would make strategic sense. RTX, Northrop Grumman, and L3Harris have each made public statements about autonomous systems acquisition priorities that are consistent with a Shield AI mandate.

How does dual-use classification affect AI company valuation in M&A transactions?

Dual-use classification typically has two effects on AI company valuation: it expands the acquirer universe by including defense primes and government-affiliated strategic buyers alongside commercial acquirers, and it complicates transaction structuring by introducing export control, security clearance, and foreign ownership considerations that require specialist legal handling. An AI company whose core technology has dual-use applications should expect higher valuation in a competitive process — because the additional defense-aligned bidders create genuine competition for commercial strategic acquirers — but also a longer transaction timeline, more complex representations and warranties around technology origin and data sourcing, and potentially a carve-out or restructuring requirement to separate ITAR-controlled components from commercial technology before a foreign buyer can complete an acquisition. The net effect on valuation depends on which applies more: the additional competition from defense buyers, or the transaction complexity discount. For companies with genuinely unique AI defense capability, the competition effect dominates. For companies where defense is a secondary market rather than a core use case, the complexity effect can suppress valuation by creating uncertainty that commercial acquirers price into their bids.

Home / Industries / AI Defense & Dual-Use

APAC AI Defense & Dual-Use: 8 Companies 2026

AI defense and dual-use companies in Asia Pacific mapped by funding, acquirer landscape, regulatory constraints, and valuation benchmarks for 2026.

Published May 5, 2026By Amafi TeamAI Defense & Dual-Use

AI defensedual-use AIAPAC defense techdefense AI M&Aautonomous systemsAI companiesdefense technology

The Asia Pacific defense AI market is entering a procurement cycle with no close historical precedent. Japan’s parliamentary approval of a defense budget doubling, South Korea’s accelerating autonomous systems program, Australia’s AUKUS obligations, and Singapore’s government AI programs have created a simultaneous uplift across the four most AI-capable defense markets in the region. The result is an acquisition environment where defense primes from the US, UK, and continental Europe are competing with APAC-native defense groups and sovereign funds to acquire AI capability before the procurement window closes.

This page maps eight companies operating at the intersection of AI and defense in Asia Pacific, covering their technical differentiation, funding position, acquirer theses, and the regulatory constraints that shape any transaction involving defense technology. Amafi Advisory advises AI company founders and corporate development teams on M&A and fundraising transactions in Asia Pacific, including transactions that require specialist navigation of cross-border defense technology restrictions.

The comparison focuses on companies where AI is integral to the defense or dual-use application, not on traditional defense contractors that have added AI features to existing products. Every company on this list has a core AI capability that could not be replicated by a traditional defense prime without a genuine technology acquisition.

Total Funding Raised — USD Millions (approximate)

AI Differentiation Tier Framework

Not all AI defense companies have equivalent technical depth. Three tiers describe the quality of AI differentiation in the defense context:

Tier 1 — AI is the core capability. The product would not exist without advanced AI, and the AI itself represents a novel contribution to the state of the art. Removing the AI would leave a product with no competitive value. Anduril’s Lattice platform is the clearest example: the platform’s ability to autonomously fuse sensor data across heterogeneous networks and coordinate autonomous platforms could not be replicated with traditional software. Shield AI’s Nova pilot is in this tier: the ability to fly an F-16-class aircraft autonomously in contested environments with degraded communications is an AI capability that no rule-based autopilot system can match.

Tier 2 — AI transforms a product that existed before. The underlying product (navigation system, drone, surveillance platform) existed without AI, but the AI fundamentally changes what it can do and how it is valued. Advanced Navigation’s AI-inertial navigation systems fit this tier: navigation systems existed before AI, but the AI-based sensor fusion and machine learning calibration enable performance in GPS-denied environments that traditional inertial navigation cannot achieve within affordable size, weight, and power constraints. Helsing’s electronic warfare AI fits here as well: electronic warfare existed for decades, but Helsing’s AI-driven signals analysis enables real-time spectrum processing at scale that transforms what operators can do.

Tier 3 — AI as an efficiency layer on existing capability. The AI improves throughput, reduces analyst burden, or automates pattern recognition, but the underlying capability would exist without it. Traditional defense contractors adding AI to existing products typically fall in this tier.

For M&A valuation, Tier 1 companies command the highest multiples. Tier 3 companies trade closer to traditional defense services multiples, with an AI premium only where the AI layer creates measurable operational advantage that can be documented in government acceptance testing.

The Eight Companies

Anduril Industries (USA, Australia)

Anduril was founded in 2017 by Palmer Luckey (Oculus founder) and a team from defense and national security backgrounds. The company’s core product is Lattice, an AI-powered command and control platform that fuses data from heterogeneous sensor networks — radar, electro-optical/infrared cameras, acoustic sensors, and third-party intelligence feeds — into a single operational picture. Lattice then enables autonomous platform coordination: drones, surveillance towers, and other autonomous assets can be tasked and coordinated by Lattice without human-in-the-loop decisions for each action.

Australia is Anduril’s most significant APAC presence. The company has contracts for Australia’s Integrated Air and Missile Defence program, operates a manufacturing facility in the Perth metropolitan area, and is positioned as a prime contractor for the AUKUS autonomous undersea vehicle program. The Ghost Shark autonomous undersea vehicle — developed in partnership with the Royal Australian Navy — is the most visible AUKUS AI program and represents a category of AI defense capability (long-range autonomous maritime operations) that no Australian-owned company was able to supply before Anduril.

Valuation: $14B (2024 Series F at $1.5B raised, implying 9x revenue multiple) Acquirer thesis: Anduril is not a typical acquisition target at its current scale, but strategic minority investments from US and Australian government-aligned vehicles have been discussed. A full acquisition at current valuation would require a defense prime with substantial balance sheet and regulatory clearance for a transaction of this complexity. RTX, Northrop Grumman, and General Dynamics are the most structurally capable acquirers.

Shield AI (USA, APAC partnerships)

Shield AI’s Nova AI autonomous pilot is capable of flying an F-16-class aircraft in contested environments without GPS, communications links, or human control. The company demonstrated this capability in DARPA’s AlphaDogfight Trials when its AI-based system consistently outmaneuvered human F-16 pilots. Shield AI acquired Heron Systems in 2021, whose AI had won the original DARPA AlphaDogfight trial.

In the APAC context, Shield AI has established partnerships with the Korea Air Force for F-35 autonomous mission planning and is in discussions with several Southeast Asian air forces. The autonomous mission capability is particularly relevant to contested-strait scenarios across the Taiwan Strait and the South China Sea, where communications jamming is a realistic operational assumption.

Valuation: $2.8B (2023 Series F) Acquirer thesis: Northrop Grumman, RTX, and L3Harris are the most capable potential acquirers. A Shield AI acquisition would give any of them a generation-ahead autonomous mission AI capability that their existing portfolios cannot match. Transaction complexity involves the US ITAR framework and DoD clearance requirements for key personnel.

Palantir Technologies (USA, Singapore and Tokyo offices)

Palantir is a public company (NYSE: PLTR) with a market capitalization exceeding $80B as of early 2026. It operates two primary government and defense products: Gotham, used by intelligence agencies and military organizations for data integration and analysis, and AIP for Defense, which applies commercial LLM capability to classified military data environments.

In Singapore, Palantir has operated since 2019 and holds contracts with Singapore government agencies including GovTech and elements of the Singapore Armed Forces. In Japan, Palantir opened a Tokyo office and entered discussions with the Japan Ground Self-Defense Force around battlefield intelligence platforms, which became more active after the defense budget expansion was approved.

Status: Public, not an acquisition target. Included as the reference acquirer of scale in government AI and as a context provider for how governments in APAC are procuring AI defense capability.

Shield AI — see above.

Hanwha Systems (South Korea)

Hanwha Systems is the defense technology subsidiary of Hanwha Group, South Korea’s largest defense conglomerate. The company develops AI-guided radar systems (PHASR phased-array radar with AI signal processing), autonomous drone systems under the K-DRONE program, and AI-based electronic warfare platforms. Hanwha Systems is also the primary systems integrator for Korea’s AI-enabled K2 tank and K9 howitzer export programs, which have generated contracts in Poland, Norway, Romania, and Australia.

The company is itself an APAC defense AI acquirer rather than a target. Hanwha Group has made multiple overseas AI defense acquisitions including the acquisition of Daewoo Shipbuilding and Marine Engineering (DSME) and various defense electronics businesses. Hanwha Systems’ acquisition appetite includes autonomous maritime systems, AI signal processing, and satellite communications AI.

Status: KRX-listed subsidiary, not independently acquirable. Relevant as an APAC acquirer of AI defense and dual-use technology.

ST Engineering (Singapore)

ST Engineering is Singapore’s primary defense and aerospace technology conglomerate, listed on the Singapore Exchange with a market capitalization of approximately SGD $7B. The company’s defense-relevant AI programs include autonomous ground vehicle systems for Singapore Armed Forces logistics, AI-powered satellite communications systems, and smart city surveillance platforms with dual-use defense applications.

ST Engineering is an APAC defense AI acquirer of note. The company acquired Newtec, a Belgium-based satellite communications company, and has made multiple US acquisitions including TransCore (intelligent transportation systems) and iXBlue’s defense-adjacent business units. For APAC AI companies in autonomous systems, satellite AI, or smart sensing with defense applications, ST Engineering is a realistic strategic acquirer.

Status: SGX-listed, not a target. Relevant as APAC-native defense AI strategic acquirer.

Advanced Navigation is an Australian company founded in 2011 that develops AI-based navigation systems for environments where GPS is unavailable, unreliable, or actively jammed. The company’s core products include the Boreas D90 (a fiber optic gyroscope inertial navigation system with AI-based calibration), Spatial (a miniaturized AI-INS for autonomous vehicles and drones), and various subsystems for autonomous maritime, aerial, and subsurface platforms.

The technology addresses a critical vulnerability in modern military operations: nearly all precision-guided weapons, autonomous platforms, and networked sensors depend on GPS, and adversaries have invested heavily in GPS jamming and spoofing. An AI-based inertial navigation system that can maintain accuracy over hours of GPS denial without accumulated drift is a strategic capability that APAC militaries are actively procuring.

Advanced Navigation’s customers include the Royal Australian Navy (subsurface autonomous vehicles), unspecified NATO member forces, and commercial autonomous vehicle programs across mining and offshore energy. The commercial revenue base — autonomous mining equipment, offshore positioning, urban air mobility — provides diversification that reduces reliance on defense revenue cycles and makes the valuation more accessible to commercial strategic acquirers.

Funding: Approximately AUD $102M raised, primarily from Australian institutional investors and strategic partners. Acquirer thesis: BAE Systems (which has a significant Australian defense footprint), Thales (with existing Australian defense contracts and interest in navigation technology), L3Harris (which has acquired multiple navigation and sensing businesses), and SAAB (which has significant Australian defense relationships and a navigation capability gap for autonomous systems). An Australian government-facilitated strategic partnership or partial acquisition is also plausible under AUKUS capability development frameworks.

Helsing (Germany/UK)

Helsing was founded in 2021 by the co-founders of TransferWise (now Wise) and former McKinsey and government alumni. The company focuses exclusively on defense AI, specifically AI for signals intelligence, electronic warfare, and multi-domain sensor fusion. Helsing’s first public product was an AI system for the Eurofighter Typhoon that reduces pilot cognitive load in electronic warfare environments by processing and prioritizing electronic signals in real time.

Helsing is not primarily an APAC company, but its relevance to the APAC market is structural: the Five Eyes intelligence alliance (US, UK, Canada, Australia, New Zealand) creates a framework through which Five Eyes-cleared AI defense technology can flow to APAC members. Australia is the APAC node most likely to see Helsing technology, particularly for Royal Australian Air Force AI programs. The company’s recent announcement of HX-2 program participation (Germany’s next-generation fighter) also implies eventual export potential to APAC partners operating German or European fighter platforms.

Valuation: $1.8B (2023 Series B at $200M raised) Acquirer thesis: European defense primes (Airbus Defence & Space, Rheinmetall, KNDS) are the most natural strategic acquirers. Given the Five Eyes dimension, BAE Systems and Northrop Grumman have strategic logic as well. For an APAC M&A advisory context, Helsing is relevant as a potential seller to a US prime seeking APAC-compatible electronic warfare AI.

Skydio (USA, APAC deployments)

Skydio is the leading US manufacturer of autonomous drones. The company’s core technology is obstacle-avoidance and navigation AI: Skydio drones can fly autonomously in complex environments — indoors, in dense urban terrain, around infrastructure — without GPS and without manual piloting. The company has raised more than $800M and achieved a valuation of approximately $2.2B at its last round.

In Asia Pacific, Skydio has partnered with the Japan Coast Guard for maritime surveillance drones, supplied autonomous inspection drones to APAC utilities and infrastructure operators, and been designated as a US-government-approved drone manufacturer for sensitive government applications — a distinction that became commercially significant after Chinese-origin drones were banned from US government and many allied government procurement programs.

The ban on DJI and other Chinese-origin drones in sensitive government applications created a structural market opportunity for Skydio across APAC allied governments (Australia, Japan, Korea, Philippines, Taiwan) that are following or anticipating similar procurement restrictions. This replacement cycle is generating government revenue with defense-adjacent characteristics across markets where Skydio had limited commercial presence before 2022.

Valuation: ~$2.2B Acquirer thesis: L3Harris (which has made multiple drone and autonomous systems acquisitions), Northrop Grumman, and AeroVironment (which would gain complementary AI navigation capability). The US government-approved designation is a strategic asset that increases acquirer willingness to pay a premium over pure financial metrics.

M&A Deal Log: Defense AI Precedent Transactions

Transaction	Year	Value	Notes
General Dynamics / Bluehalo	2021	$1.2B	US defense prime acquires autonomous systems and directed energy AI company
Shield AI / Heron Systems	2021	Undisclosed	AI pilot company acquires AlphaDogfight winner, consolidating autonomous flight AI
Northrop Grumman / Reaction Engines	2019	$26M minority	US prime takes stake in UK hypersonics/propulsion AI; APAC relevance via Five Eyes
BAE Systems / Bohemia Interactive Simulations	2024	Undisclosed	Training AI and synthetic environment acquisition; APAC expansion planned
L3Harris / Viasat DIRCM programs	Ongoing	—	Defense prime building AI electro-optical missile defense capability
US DoD / Palantir TITAN contract	2024	$618M	Not an acquisition; benchmark for government AI contract size in APAC-relevant program

The defense AI M&A market remains smaller in transaction count than commercial AI M&A, but average deal size is significantly higher because defense AI companies often command strategic premiums from acquirers facing government program timelines. The typical structure includes upfront payment for technology access plus milestone-based earnouts tied to government program awards or technical performance benchmarks, rather than the ARR-based earnouts common in commercial SaaS acquisitions.

Acquirer Landscape

US defense primes are the most active acquirers of AI defense capability globally and the most relevant to APAC AI companies with Five Eyes-compatible technology. RTX, Northrop Grumman, L3Harris, General Dynamics, and BAE Systems each have articulated AI acquisition strategies. Their primary interest is autonomous systems, electronic warfare AI, and AI for intelligence processing. For APAC AI companies, a US prime acquisition typically requires restructuring to separate ITAR-controlled from non-ITAR technology, but the strategic logic is clear: buying an APAC AI company gives the acquirer a footprint in the fastest-growing defense procurement market outside the US.

European defense primes are increasingly active, particularly Airbus Defence & Space, Rheinmetall, and KNDS. Their APAC AI acquisition interest is primarily driven by export market opportunities in Australia, Japan, and South Korea, where European defense companies have existing platform relationships and need AI capability to remain competitive against US-origin alternatives.

APAC-native defense primes (Hanwha, ST Engineering, Mitsubishi Electric in defense, Kawasaki Heavy Industries) are both acquirers and partners. Their acquisition targets tend to be smaller APAC-native AI companies with specific technical capabilities (denied-GPS navigation, AI sensor fusion, autonomous platform AI) that complement their existing hardware platforms. The challenge is that some APAC defense primes have domestic content requirements that make foreign AI acquisitions structurally difficult.

Sovereign technology funds (GIC in Singapore, Future Fund in Australia, KIC in Korea) have made limited direct investments in defense AI but are relevant as co-investors in transactions where a commercial investor alone cannot satisfy government ownership conditions. The AUKUS framework has created new pathways for Australian, UK, and US sovereign investment in each other’s defense AI companies.

Regulatory Constraints Summary

Jurisdiction	Primary Framework	Key Restriction	APAC Implication
USA	ITAR / EAR	Controls export of defense technology; requires license for foreign acquisition of ITAR-controlled companies	Most US AI defense companies require ITAR analysis before any cross-border transaction
Australia	FATA / Security of Critical Infrastructure Act	Foreign investment in defense businesses requires FIRB approval; state-linked acquirers may be blocked	Advanced Navigation, Skydio Australia operations subject to FIRB review
South Korea	Defense Industry Promotion Act	MND approval required for transactions in registered defense companies	Hanwha Systems and LIG Nex1 subsidiaries not freely acquirable
Japan	FEFTA	Foreign investment in defense-related sectors requires prior notification and waiting period	Japanese defense AI investments by non-G7 acquirers face higher scrutiny post-2022
Singapore	No specific defense sector restriction	General FDI rules apply; sensitive government contracts may involve security vetting of new owners	ST Engineering transactions would require SGX disclosure and potentially MAS and MTI review

Valuation Benchmarks

Company Type	Revenue Multiple	Notes
Autonomous systems AI (Tier 1)	10-18x ARR	Pure autonomous capability with government contracts; Anduril at ~9x revenue was perceived as below comparable Tier 1 benchmarks
Electronic warfare / signals AI	8-14x ARR	High value but narrow addressable market; Helsing’s $1.8B implies roughly 10-12x ARR at current revenue
AI navigation (denied GPS)	8-15x ARR	Premium for unique capability with documented government procurement; Advanced Navigation at known deal terms implies 10-12x ARR territory
Drone AI (US-approved)	6-12x ARR	Skydio’s $2.2B at $170M+ ARR implies approximately 12x; premium for US-approved designation
Dual-use AI (commercial + government)	8-16x ARR	Blended commercial/government multiple; premium where defense revenue grows faster than commercial base

“The AI defense M&A market in APAC is at an inflection point we have not seen since the early days of commercial AI adoption. Japan’s budget change, AUKUS, and Korea’s export expansion have created simultaneous procurement cycles across three of the four most capable defense markets in the region. The acquirer competition for APAC-native AI defense capability — between US primes, European primes, and APAC-native defense groups — is creating deal dynamics unlike anything in the commercial AI market.” — Daniel Bae, Founder, Amafi Advisory ($30B+ transaction experience across defense, technology, and cross-border M&A)

AI Defense M&A: APAC-Specific Considerations

Three dimensions make AI defense M&A in APAC structurally different from the US or European market.

Government procurement cycles are longer and more relationship-dependent. APAC defense procurement — particularly in Japan, South Korea, and Southeast Asia — involves a longer pre-commercial relationship period than US DoD procurement. An AI defense company selling in APAC needs to have already established relationships with defense ministries, research agencies (ADD in Korea, ATLA in Japan, DSTA in Singapore, DSTG in Australia) before government procurement begins. Companies that have navigated this relationship phase are more valuable to acquirers than those with equivalent technology but no government relationship, because the relationship is not transferable through an acquisition on its own.

AUKUS creates a structural advantage for Australian AI defense companies. The AUKUS agreement enables Australia, the UK, and the US to share defense technology and jointly develop capability in ways that bypass the normal ITAR licensing process for inter-government transfers. For Australian AI defense companies, this means that technology developed under AUKUS programs can be shared with US and UK defense contractors and eventually with US and UK government programs, extending the effective addressable market for Australian AI defense technology by orders of magnitude relative to the pre-AUKUS position. This structural change makes Australian AI defense companies more attractive to US and UK acquirers than their current revenue or market position would suggest.

Dual-use commercial revenue matters for valuation. Pure defense revenue is harder to value than commercial revenue because it is more concentrated (typically one or a few government customers), less predictable (subject to budget cycles and program changes), and harder to underwrite with comparable transactions. AI defense companies that have demonstrated the same technology works in commercial applications — Advanced Navigation in autonomous mining vehicles, Skydio in infrastructure inspection — command higher multiples than equivalent pure-play defense revenue, because commercial revenue is more financeable and provides the acquirer with a platform that can grow independent of government budget cycles.

Working with Amafi Advisory on AI Defense Transactions

Amafi Advisory advises AI company founders and corporate development teams on M&A and fundraising across Asia Pacific. For AI defense and dual-use transactions, we bring two specific capabilities beyond standard M&A advisory: experience navigating cross-border technology transfer frameworks (ITAR, FATA, FEFTA) in the context of AI company transactions, and established relationships with APAC-native defense groups and government-aligned investment vehicles that are rarely active in general commercial AI M&A mandates.

If you are building an AI company with defense or dual-use applications in APAC, the regulatory and acquirer landscape is sufficiently different from commercial AI M&A to warrant specialist advice from advisors who have worked in both the defense and commercial AI contexts.

Talk to our team at /contact, or learn more about our sell-side advisory and buy-side acquisition advisory for AI companies.