Defense Manufacturing in the AI Era: Using AI to Scale Capacity and Meet Rising Demand

As global defense spending reaches historic levels, manufacturers face unprecedented demand, expanding order backlogs, and increasing pressure to modernize operations. This IBM Institute for Business Value research brief explores how artificial intelligence is helping defense manufacturers increase production capacity without expanding facilities by optimizing manufacturing, supply chains, engineering, and cybersecurity. Based on a survey of defense industry executives, the report examines AI adoption, agentic AI, workforce readiness, sovereign AI, regulatory compliance, and data governance while outlining practical recommendations for scaling AI securely to improve resilience, accelerate production, and strengthen national defense capabilities.