Emerging Defence and Dual‑Use Technology Clusters in Europe

Executive Summary

Europe’s defence and dual-use innovation ecosystem is consolidating around a network of strategic clusters, with the most developed hubs located in France, Germany, Italy, and Spain. These regions concentrate a significant share of European capacity in aerospace systems, secure communications, cyber defence, advanced materials, and satellite technologies. Complementary innovation centres are emerging in Northern Europe, including the Nordic and Baltic regions, where specialisation in digital defence and secure technologies is supported by NATO initiatives such as DIANA. In Central and Eastern Europe, Poland, the Czech Republic, and Romania are strengthening their industrial base, often around capital cities and legacy defence facilities. These clusters are structured through dense networks of defence primes, SMEs, research institutes, and universities, and increasingly integrated by EU instruments such as the European Defence Fund and Permanent Structured Cooperation. Joint programmes like Eurodrone or IRIS² have not only channelled funding to core industrial regions but also created incentives for broader territorial cooperation. National ecosystems are further supported by smart specialisation strategies and regional investments. This layered geography reflects a shift from fragmented national champions to more networked, capability-oriented clusters across the EU and NATO area.

For institutional investors and strategic capital providers, the evolution of these clusters opens a set of tangible opportunities. EU and NATO frameworks are actively supporting dual-use and defence-relevant technologies with consistent funding and regulatory visibility through EDF, DIANA, Horizon Europe, and the Chips Act. As public initiatives reduce risk and anchor long-term capability needs, private capital can accelerate scale-up in sectors such as microelectronics, space systems, secure AI, advanced sensing, and resilient communications. Regional hubs aligned with European priorities are becoming increasingly investable—combining technology maturity, infrastructure, talent, and access to flagship programmes. At the same time, structural challenges remain: defence innovation is still concentrated in a few member states, and Europe remains heavily dependent on foreign suppliers for semiconductors and critical materials. Strategic capital has the potential to mitigate these risks, filling capacity gaps in underfunded segments, reinforcing European resilience, and securing exposure to a sector at the intersection of technological transformation and geopolitical urgency. For investors seeking long-horizon value in areas with increasing political prioritisation, defence-tech clusters in Europe represent a structurally enabled and policy-backed opportunity space.

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