TAMPA, Fla. — German defense contractor Rheinmetall plans to start building synthetic aperture radar satellites next year with Finnish SAR constellation operator Iceye, amid Europe’s broader push to bolster military intelligence capabilities.
The company signed a deal with Iceye May 8 to own 60% of a joint venture aiming to set up a satellite production facility in Neuss, Germany, where Rheinmetall is anchoring its space expansion plans.
Financial terms were not disclosed, and the deal remains subject to final agreements and regulatory approvals.
“With the establishment of the new joint venture, we are making further inroads into the space domain,” Rheinmetall CEO Armin Papperger said in a statement.
“We are thus not only responding to the increased demand for space-based reconnaissance capabilities among armed and security forces worldwide, but also contributing to the preservation and expansion of Germany as a centre of technology.”
Growing defense appetite
Global military spending hit a record $2.7 trillion in 2024, according to the Stockholm International Peace Research Institute (SIPRI), representing a 9.4% increase over the previous year and the sharpest annual rise since the end of the Cold War.
SIPRI said more than 100 countries increased their defense budgets last year as sovereign capabilities rise to the top of political agendas.
Germany’s military expenditure surged 28% to $88.5 billion, making it the largest defense spender in Western Europe for the first time in decades, behind only the United States, China and Russia.
The joint venture comes months after Germany amended its constitution to remove a 1% GDP cap on defense spending. The reform is part of a sweeping infrastructure and security investment plan worth roughly one trillion euros ($1.12 trillion) over the next decade.
Space is critical for both infrastructure and security, Walther Pelzer, head of Germany’s space agency DLR, said April 9, weeks after the reform passed.
“This is the reason that I expect that space will become part of this cake,” he said.
Pelzer said increased spending will help Germany become a stronger partner within the European Union while also strengthening bilateral and multilateral ties beyond the bloc.
As the U.S. reviews its global security role, the European Commission also recently announced plans to mobilize up to 800 billion euros to bolster the region’s defense capabilities, with a large proportion anticipated to be allocated for space.
“The latest policies adopted in Germany and many other European countries suggest that Europe has entered a period of high and increasing military spending that is likely to continue for the foreseeable future,” said SIPRI researcher Lorenzo Scarazzato.
Ramping up a strategic alliance
The joint venture also marks the latest milestone in a steadily expanding partnership between Iceye and Rheinmetall, which reported nearly $11 billion in 2024 revenue and employs more than 31,000 people.
Production under the joint venture is expected to begin before the end of June 2026. The companies say the initiative could later expand to include other space-based capabilities.
During Rheinmetall’s May 8 earnings call, Papperger said the venture could eventually generate up to 1 billion euros in annual sales, though he did not provide a timeline.
Founded in 2014, Iceye operates one of the world’s largest SAR constellations, providing government and commercial customers with imagery using radar signals unaffected by cloud cover, weather or lighting conditions.
The Finnish operator’s partners include UAE-based Space42, which is using its SAR satellites to build out a hybrid connectivity and Earth observation platform that combines data analytics and communications.
