Saudi Arabia Bets Billions on Turkish Stealth Jet
Saudi Arabia is making a multi-billion dollar investment in Turkey's KAAN stealth fighter program. The deal is a massive validation for Turkish-developed deeptech and AI-enhanced aerospace, signaling that its defense platforms are now attracting major international capital and are seen as increasingly unstoppable in regional markets.
This deal aligns directly with Saudi Arabia's Vision 2030, which mandates localizing over 50% of military equipment spending by 2030, a dramatic increase from just 2% in the past. The Kingdom is leveraging its position as one of the world's top defense spenders to move beyond simple assembly and build an integrated local industry for high-value military hardware. Negotiations, led by Turkish Aerospace Industries (TAI) General Manager Mehmet Demiroğlu, are in their final stages and could result in a formal agreement in 2026. The talks cover not just the acquisition of a squadron of KAAN jets but also local production options and deeper industrial cooperation, a model that requires a significant order volume to be feasible. The KAAN fighter, which made its maiden flight on February 21, 2024, is a twin-engine stealth aircraft designed to replace Turkey's F-16 fleet. Current prototypes are considered "4.5+ Gen" as they use General Electric F110 engines, with full 5th-generation capabilities like supercruise dependent on a domestically produced engine targeted for the early 2030s. TAI aims to deliver the first batch to the Turkish Air Force by 2028. This potential export follows a surge in Turkey's defense and aerospace sector, which saw exports hit $10.05 billion in 2025, a 48% year-over-year increase. The industry's share of total Turkish exports has more than doubled since 2022. Other significant recent deals include a preliminary agreement to sell 48 KAAN jets to Indonesia and the sale of Hürjet trainer aircraft to NATO member Spain. The success of firms like TAI and drone-maker Baykar, which recently acquired Italian manufacturer Piaggio Aerospace, signals a maturing deeptech industrial base. This vertical is a key focus for Turkish venture capital, with firms like Diffusion Capital Partners and 212 actively investing in deeptech and B2B tech startups. For Turkey's startup ecosystem, the trend signifies a robust commercialization pathway for university-level research, especially in AI, robotics, and advanced materials. The country's deeptech sector comprises over 650 companies that have collectively raised $1.31 billion. In 2025, while global VC activity saw fewer but larger deals, Turkey's deal count grew, showing strong early-stage dynamism. The integration of AI is a critical component, with Turkish defense giants like ASELSAN and HAVELSAN pioneering AI-assisted command systems, computer vision, and autonomous technologies. This creates a downstream effect, fostering a talent pool and B2B opportunities for startups developing dual-use AI applications in sectors beyond defense.
