Tech companies pivot to military gear as NATO wavers and Putin’s threats grow

What does it take for a tech company to go from producing products for civilians to the military? Governments are interested in helping, but they’re too slow.

As confidence in NATO’s ability to protect Europe declines, some tech companies are shifting focus from working on civilian innovations to military hardware. No wonder – as threats from Russia and the unpredictability from Donald Trump’s reign continue, some companies are shifting focus to arming Europe to the teeth.

Some see it purely as a business opportunity, some do it after getting grants initiated by their governments, one of the obvious examples being Musk’s SpaceX.

Originally founded to provide commercial satellite launches, in recent years, SpaceX has secured massive US government contracts to provide military satellite launches.

Theresa Campobasso, Senior Vice President of Strategy for Exiger Government Solutions, is an expert on operational and technical strategies for government agencies and defense contractors. She sees Europe’s defense posture undergoing a transformation driven by necessity, as the war in Ukraine was the catalyst that forced many European nations to rethink.

“While I think that NATO remains critical, there’s a growing realization that Europe must build greater independent capacity, particularly in cyber, space, and supply chain resilience. This is not necessarily about replacing NATO but about creating a more credible and interoperable European pillar within it,” she says.

According to Campobasso, many countries in Europe are already falling behind, as she puts it: “Critical sectors like healthcare, energy, and transportation remain exposed and don’t necessarily have the culture of security that others have, and private companies continue to often be the vulnerable link, though there are bright spots.”

So, what are European countries doing exactly to prepare for the possible World War III, and how are tech companies taking this pivot? After all, they have done it before: during World War II, car companies that normally produced passenger cars began making military vehicles: Fiat did it in Italy, Mitsubishi in Japan, and Chrysler in the US. Even Marks & Spencer made parachutes, and Max Factor developed camouflage makeup for the US military.

How is this cycle of gearing up differently? Quite a lot, it turns out.

Germany and France lead the way

Germany and France, two of Europe’s biggest economies, are not sitting out this arms race. As Russia keeps flexing and NATO grows shakier, both countries are ramping up their military industry and tech.

For instance, last year in December, the German government approved a €100 billion special fund aimed at modernizing the Bundeswehr – the unified armed forces of the country, including the army, navy, air force, cyber command, joint support services, and medical service.

A company that has already benefited from this is Rheinmetall. This February, it announced plans to convert two of its automotive parts plants in Berlin and Neuss into defense equipment facilities. They’ll do it by using the government’s increased military spending to ramp up production, often of dual use.

By the way, dual use is something worth remembering when companies announce their new shifts to producing, for instance, new batteries, slightly different drones, and so on. The dual practicality of a device becomes a key feature when gearing up for the possibility of war.

For instance, this February KNDS (Krauss-Maffei Wegmann & Nexter) bought a former Alstom rail-car factory in Görlitz. The company converted it to produce armored vehicle components, like Leopard 2 tank hulls.

As for France, Thales, a French aerospace and cybersecurity company with roots in civilian avionics and communications, saw a 15% jump in defense sales in the first quarter of 2025. The company now focuses on producing sensors, radars, and avionics. At first, they were developed for planes and satellites, but now are just as relevant for drones and battlefield surveillance tech.

According to Campobasso, Europe’s posture is more awake than it’s been in decades, but the follow-through still lags behind the urgency of the threats.

“We see countries like Germany and France rearming, and initiatives like PESCO (Permanent Structured Cooperation) and the European Defence Fund reflects a growing commitment to collective capability-building. But there are still a lot of persistent challenges: fragmented defense markets, uneven spending, and slow decision cycles,” she says.

In the coming years, European governments are likely to establish more formalized and structured partnerships with the private tech sector. These shifts are likely to be long-term commitments that support the production of dual-use technology. Campobasso calls them overdue.

“The future demands structured public-private partnerships that are agile, secure, and mutually reinforcing,” she said.

“I think of it as a ‘national security innovation base’ model tailored to European realities. Such partnerships could include pre-approved procurement pathways for trusted vendors, secure data-sharing ecosystems, and joint R&D hubs focused on dual-use tech.

“Governments must also offer liability protections, clear export guidelines, and long-term funding commitments if they expect private industry to commit seriously. We’re moving toward a model where tech companies aren’t just vendors – they’re strategic partners in deterrence and defense.”

However, these still remain a challenge. For governments, faster and more flexible management of bureaucratic processes is often needed. For companies, it’s the tech and culture adaptation to producing technology for a new purpose.

The top 3 biggest challenges for companies to go from civil to military tech

Even though the governments themselves encourage their partnerships with the private sector, the governments themselves tend to be what slows the production.

1. Civilian tech company work culture clashes with government bureaucracy

“The first thing that springs to mind is that the culture gap is enormous. Civilian tech companies, especially startups, are used to rapid development cycles, agile decision-making, and market-driven incentives. Defense, on the other hand, is governed by slow procurement timelines, classified requirements, and a fairly rigid compliance environment,” says Campobasso.

2. High security and trust barriers

“Companies must meet stringent cybersecurity and supply chain integrity standards, many of which they’ve never encountered before. For global companies, there’s also the risk of their international partnerships or IP exposure becoming disqualifying under national security scrutiny.”

3. High costs and complicated government rules

“For many startups, the sheer cost of compliance can be prohibitive... But there’s still a lot of red tape and not enough emphasis on outcomes. We need procurement models that are faster, more modular, and that reward innovation over incumbency without sacrificing security.”