Emerging trends in aerospace and defence sector: Digital infrastructure, advanced manufacturing and AI to become the backbone of operations – Battaglia
Amid the geopolitical tensions, the aerospace and defence sector is entering a period of profound transformation, and, at the same time, many organizations are grappling with persistent supply chain challenges, capacity constraints, and shortages of specialized human resources.
In this interview, Dr. Cesare Battaglia, PwC’s EMEA & Italy Aerospace, Defence & Security Leader, discusses with Ndubuisi Micheal Obineme, Managing Editor, The Energy Republic, about the major trends reshaping the sector, the emerging opportunities for companies beyond traditional defence markets, and the disruptive forces—from AI and autonomous systems to sustainability and energy resilience that will define the industry’s next decade of growth and innovation for the aerospace and defence sector. Excerpts:
TER: What are the most significant industry shifts and emerging trends currently shaping the aerospace and defense sector, and where do you see market opportunities?
Dr. Battaglia: The aerospace and defence sector is undergoing a structural transformation driven by three major shifts.
The first one is defence spending. It is accelerating globally, particularly in Europe, with a broader scope extending beyond the traditional military capabilities into infrastructures, digital technologies, and industrial resilience.
The second one is a strong convergence between civil and military sectors, including technologies such as AI, advanced manufacturing, and secure connectivity, which are becoming critical enablers across both domains, creating new dual-use opportunities.
The third one is industrial scale, and supply chain sovereignty is becoming a strategic priority.
For market opportunities, there are many opportunities beyond the traditional defence players. There is strong potential for companies in tech, manufacturing, energy, and telecom infrastructures to leverage their existing capabilities.
TER: Supply chain disruptions have challenged manufacturers worldwide in recent years. What procurement strategies are proving most effective in building more resilient and agile aerospace and defence supply chains?
Dr. Battaglia: Organizations are moving away from cost-driven procurement models toward resilience-focused strategies. The key levers include supplier diversification through near-shoring to reduce geopolitical risk, alongside building a stronger strategic partnership.
Digitalization is also playing a central role with advanced analytics, digital twins, and real-time visibility tools, enabling better forecasting and risk management across the supply chain.
TER: As the PwC’s EMEA & Italy AD&S Leader, what common operational challenges do you see across these markets, and how is PwC helping governments and organizations to improve efficiency and competitiveness?
Dr. Battaglia: Across EMEA, many organizations are facing capacity constraints, a fragmented procurement process-based scattered supply chain, and slow adoption of advanced technologies.
There’s also a persistent gap in specialized skills, particularly in digital and engineering domains. There will be a shortage of tens of thousands of human resources in the coming years.
PwC supports both government and industry players by addressing these challenges.
TER: Looking ahead, what emerging trends or disruptive forces do you believe will define the next chapter of growth and innovation for the aerospace and defense sector?
Dr. Battaglia: The next phase of growth will be shaped by the increasing role of digital and data-driven capabilities, AI, high-performance computing, and advanced analytics, which will transform how systems are designed, operated, and maintained.
At the same time, digital infrastructure will become a critical backbone for defence operations.
Another key trend is the rise of autonomous and uncrewed systems across all the domains, including air, land, and maritime domains, requiring new operational concepts and industrial models.
Finally, sustainability and energy resilience will play a more prominent role, influencing both operations and long-term investment decisions.
TER: What is your outlook for the aerospace and defence sector over the next 5 – 10 years?
Dr. Battaglia: The outlook for the sector is very positive, supported by sustained public investment and increasing strategic relevance.
We expect that continued growth and defence spending, combined with the progressive expansion of the sector’s boundaries, will include infrastructure, digital capabilities, and industrial resilience.
Over the next decade, the sector will become more interconnected with adjacent industries, and civil capabilities will play a key role in the defence sector.
