Chile Bets on State Arms Makers to Build a Regional Defense Industry

CHILE · DEFENSE

Chile’s new government wants to turn three long-overlooked state companies into the backbone of a competitive defense industry — a bet on industrial policy as much as on national security.

A plan to rebuild the defense industry

Chile’s government has unveiled a 2026–2027 action plan for its defense ministry that puts the strengthening of the country’s strategic state-owned companies at its core. The plan was presented in the framework of the first state-of-the-nation address (“cuenta pública”) delivered by President José Antonio Kast, who took office in March, before the National Congress in Valparaíso on June 1. Over the course of this year, the government says it will draw up a work plan to produce, within twelve months, a dedicated program to strengthen the national defense industry — building on a collaboration agreement signed in March between the defense and economy ministries, the navy, the air force and the state development agency Corfo.

The three state companies at the center

The strategy revolves around three state-owned firms, each tied to a branch of the armed forces. Famae — the army’s “factories and workshops” — produces small arms, ammunition and armored-vehicle support. Asmar, the navy’s shipbuilder, runs Chile’s continuous naval-construction plan and performs high-level maintenance for domestic and foreign vessels. Enaer, the air force’s aerospace company, maintains the fighter fleet, is carrying out a structural and avionics upgrade of Chile’s F-16s, and is developing a domestically designed trainer aircraft. The government’s stated aim is to modernize the governance of all three and turn them into an integrated, profitable industry with international projection.

The “triple helix” and dual-use bet

At the heart of the approach is what the government calls a “triple helix” model — a partnership linking the state, private industry and universities to build an innovation ecosystem. The explicit goal is to develop dual-use capabilities, technologies with both civilian and military applications, that can spread the cost of research and open commercial markets beyond defense procurement. It is a familiar template in countries that have built successful arms industries, and it frames Chile‘s effort as industrial policy: the bet is that defense spending, channeled through domestic firms and research partnerships, can generate technology, skilled jobs and exports rather than simply flowing abroad to foreign suppliers.

Milestones and the road to 2030

The nearest concrete milestone comes on June 18, when Asmar’s Talcahuano plant is scheduled to launch the multipurpose vessel Magallanes, the first of two ships under a project to renew the navy’s amphibious and logistics capacity. Over the 2026–2030 horizon, the plan envisions a defense industry that is integrated, profitable and internationally competitive, with the government working alongside other ministries to consolidate financing mechanisms. The ambition is significant for a country whose defense industry has historically been limited and focused on national needs; whether it materializes will depend on sustained funding and on overcoming the governance and transparency problems that have dogged these firms in the past. By the end of the decade, the stated target is for Chile to stand as a relevant regional player in defense manufacturing.