The underwater realm has become a key battleground in modern warfare, with submarines taking centre stage as both predator and prey. The classic adage among sailors remains true: underwater warfare boils down to sonar and torpedoes. Securing a stable sonar contact is crucial for launching a torpedo and successfully engaging a target, whether it be another submarine or a surface vessel. While other sensors and weapons exist, sonar and torpedoes remain the cornerstones of this stealthy domain.
The technology underpinning undersea warfare is incredibly complex, demanding substantial research and development. Smaller, specialised firms can carve out their niche by focusing on specific segments, but it's the larger companies that possess the resources for a more comprehensive approach. This dynamic often leads to a cyclical trend: smaller companies innovate and develop niche technologies, which are then acquired by industry giants seeking to expand their portfolio. The first two decades of this century saw a period of diversification, with numerous small firms emerging. This phase appears to have reached its peak, suggesting a new wave of mergers and acquisitions may be on the horizon.
Following the United States' withdrawal from Afghanistan in 2021, land warfare receded in prominence, prompting a surge in the undersea warfare market, particularly for submarines. Navies worldwide have come to realise that a fleet of operational submarines is the most effective way to project their power beyond their own territorial waters, marking their transition from local to regional players. Submarines are incredibly cost-effective, as a small force can exert a powerful presence due to their stealth. Two or three submarines can operate unseen, casting a shadow over naval operations and impacting every aspect of activity. This influence grows exponentially with the size of the submarine fleet. Once a naval presence is established, other assets become important, but the submarine, as a formidable ship-killer, remains unparalleled.
Modern submarines are a key component of a fleet's offensive capabilities. To be recognised as a regional naval power, a nation must deploy a capable submarine force. Nuclear-powered attack submarines take this ship-killing capability to another level, adding unmatched strategic mobility, allowing for rapid worldwide deployment. A nation aspiring to be a global naval power must operate nuclear-powered submarines. The acquisition of diesel-electric submarines transforms a coastal patrol navy into a regional force; the addition of nuclear-powered submarines elevates that navy â and the nation it serves â to world power status. These political considerations often drive submarine acquisition as much as operational or strategic needs.
Smaller navies face a balancing act between the considerable cost of maintaining an undersea warfare capability and the immediate operational requirements of their surface fleet. Denmark, for example, made the decision in the early 21st century to divest its submarine service, deeming the investment unsustainable. Instead, they prioritised their surface fleet. However, in June 2023, Denmark reversed this 20-year-old decision, now seriously considering reactivating its submarine service. This policy shift is driven by Russia's aggressive invasion of Ukraine and the fact that Russia's Baltic Sea fleet must traverse Danish waters to reach the North Atlantic. Previously, Denmark relied on its allies to handle undersea warfare while focusing on its role in Europe's main battle tank coalition.
Submarine construction has been steadily increasing in recent years, reflecting the growing recognition of the strategic importance of a submarine fleet. Navies worldwide are adopting the understanding that operational submarines are the key to transforming from local to regional powers, as exemplified by China's expansionist ambitions in the South Pacific.
The undersea warfare market reflects the diverse range of systems involved, including anti-submarine warfare (ASW) systems, combat management systems, mine warfare and countermeasures systems, torpedoes, and various unmanned underwater vehicles. For nearly two decades, the market was overshadowed by land-based international conflicts and threats, such as the wars in Iraq and Afghanistan. However, the projected increase in submarine construction, driven by China's growing influence, is now placing undersea warfare back in the spotlight, receiving the attention and resources it requires.
It is also important to note that the torpedo market, especially the heavyweight torpedo segment, is strongly influenced by submarine procurement patterns. The sale of a particular submarine often indicates the type of torpedo the customer will purchase. Traditionally, German-built submarines were equipped with German torpedoes, and French boats with French-made torpedoes. Today, European-built submarines are generally armed with European torpedoes. While this close relationship exists between continental submarine and torpedo manufacturers, there are no absolutes in this market.