Aselsan — Turkish Defence Cycle

Aselsan is Turkey's largest defence electronics company — developing and producing military communications, radar, electronic warfare, electro-optics, navigation and avionics systems for Turkish Armed Forces and export customers. As a subsidiary of the Turkish Armed Forces Foundation (TSKGV), Aselsan is Turkey's national defence electronics champion — benefiting from Turkey's strategic commitment to domestic defence industrialisation and reduced dependence on foreign defence suppliers.

Turkish Defence Independence: The Policy Tailwind

Turkey's strategic goal of domestic production for 75%+ of defence needs (up from below 30% in 2000) has been the defining driver of Aselsan's growth. Following Western weapons embargoes (US suspended F-35 deliveries over Turkey's S-400 purchase), Turkey has dramatically accelerated domestic defence electronics procurement. Aselsan captures this import substitution spending across radar, communications, EW and avionics systems.

Export Markets: The Growth Frontier

Aselsan's export backlog has grown dramatically — with contracts in Pakistan (SHORAD missile systems), Oman (military communications), Malaysia, Bangladesh and African markets. These export contracts are driven by Aselsan's competitive pricing versus Western equivalents and Turkey's strategic relationship-building with non-NATO developing world militaries. Export revenues reduce dependence on Turkish government budget cycles.

AESA Radar: The Technology Flagship

Aselsan's AESA (Active Electronically Scanned Array) radar development — for the Turkish Aerospace F/A-TF fighter programme — represents Turkey's most ambitious defence technology project. Successfully developing AESA radar would place Turkey in a very small global group of nations with this capability, validating Aselsan's technology trajectory and opening export markets for advanced radar systems.

TRY Depreciation: The Export Revenue Amplifier

Aselsan earns export revenues in USD while operating costs are significantly TRY-denominated (Turkish engineers, facilities, local suppliers). TRY depreciation dramatically improves USD margins on export contracts — each 10% TRY depreciation adds approximately 5–7% to USD-equivalent export profitability. This makes Aselsan's USD earnings counter-intuitively resilient during Turkish currency crises.

Key Risks

Turkish geopolitical positioning — balancing NATO membership, Russian S-400 procurement and independent foreign policy — creates export restriction risks from Western partners. Aselsan's technology depends partly on Western components that could be subject to export controls during US-Turkey tensions. TSKGV ownership creates governance risk and potential for non-commercial decision-making. TRY inflation raises local cost base faster than revenue growth in TRY terms.

Cycle Performance Summary