Lockheed Martin and Israel’s Industrial Cooperation Authority signed an agreement on December 3, 2025, extending their partnership for another four years through 2029, strengthening one of the most significant defense industry relationships between the United States and Israel.
The ceremony in Israel was attended by Economy and Industry Minister Nir Barkat, Head of the Industrial Cooperation Authority Yazeed Sheick-Yousif, Lockheed Martin COO Frank St. John, and Lockheed Martin Israel Chief Executive Tal Galor. The extension updates the Umbrella Industrial Cooperation Agreement first signed in 2005.
A Four-Decade Partnership
Lockheed Martin has supplied Israel with combat aircraft since the 1970s and 1980s, beginning with C-130 transport planes and F-16 fighters. The company currently provides Israel with F-35 stealth fighter jets, which give the Israeli Air Force a significant technological advantage in the region.
Since 2005, Lockheed Martin has invested over $4 billion in Israel, according to the company’s statement. The most recent agreement, signed in 2020, led to more than $470 million in local investments over four years.
How Industrial Cooperation Agreements Work
An Umbrella Industrial Cooperation Agreement allows foreign defense companies to sell goods more easily in Israel in exchange for investing a percentage of contract value back into Israeli industry. In 2020, Lockheed Martin committed to reinvesting 35% of contract value into Israeli companies through offset and counter-trade activity.
By 2019, Israeli companies had generated $1.75 billion in sales to Lockheed Martin related to F-35 production, with contracts involving approximately 40 Israeli firms in defense, technology, venture capital, and research sectors. Israeli companies produce components that are integrated into F-35s sold worldwide.
One example of this cooperation: Israel Aerospace Industries restarted F-16 wing production in 2021 due to global demand for the F-16 Block 70/72 variant, with wings shipped to Lockheed Martin’s final assembly line in South Carolina.
Beyond Weapons: STEM Education Investments
Part of Lockheed Martin’s investment goes beyond hardware. In 2022, the company launched kindergartens in northern Israel focused on STEM education to encourage early interest in science and technology among children.
“This collaboration strengthens Israel’s security, creates new engines of economic growth, and brings investments that provide significant opportunities for local industries to expand and increase exports,” Minister Barkat said at the signing ceremony.
Frank St. John emphasized that the agreement “enables us to strengthen resiliency through a broader industrial footprint, deepen collaboration with leading Israeli companies, and advance high-impact STEM initiatives that build the talent pipelines essential for future allied defense capability.”
Israel’s Booming Defense Export Industry
The industrial cooperation comes as Israel’s defense industry is experiencing unprecedented growth. In 2024, Israeli defense exports reached a record $14.79 billion, a 13% increase over 2023 and the fourth consecutive record-breaking year.
European countries purchased 54% of Israeli defense exports in 2024, up from 35% in 2023, making Europe Israel’s largest defense export market. Air defense systems—including missiles, rockets, and missile defense platforms—comprised 48% of total exports, up from 36% the previous year.
This growth occurred despite Israel fighting on multiple fronts since October 7, 2023. Israeli Defense Minister Israel Katz attributed the export success to “the successes of the IDF and defense industries against Hamas in Gaza, Hezbollah in Lebanon, the Houthis in Yemen, the Ayatollah regime in Iran, and in additional arenas.”
Major Deals Drive Export Growth
One of the most significant recent contracts is Germany’s purchase of Israel’s Arrow 3 missile defense system. Germany and Israel signed a $3.6 billion deal for the long-range ballistic missile interceptor, marking Israel’s largest single defense export ever.
The Arrow 3 system will be deployed to Germany in 2025, making it the first time the system has been stationed outside Israel. The deal includes the Arrow Weapon System, Arrow 3 missiles, spare parts, and training for German Luftwaffe crews. Germany plans to integrate the system into its European Sky Shield defense initiative.
As of June 2025, Israel entered the final phase of preparations to deliver the system to German forces, with high-level coordination meetings between Israeli and German defense officials.
International Pushback and Continued Sales
Despite the record export figures, Israel faces weapons embargoes from several countries. Canada and Spain, among others, imposed restrictions on arms sales to Israel citing the ongoing war in Gaza.
However, major military powers continue to purchase Israeli defense technology. The United States provided Israel with $174 billion in bilateral assistance and missile defense funding since World War II, with a current Memorandum of Understanding covering 2019-2028 providing $38 billion in military aid.
Strategic Significance
The Lockheed Martin partnership extension reflects broader trends in global defense cooperation. Israel has become a major hub for defense technology development, with its systems battle-tested in real combat conditions—a selling point for potential customers facing their own security challenges.
The relationship benefits both sides: Lockheed Martin gains access to innovative Israeli technology and manufacturing capabilities, while Israeli companies secure long-term contracts and technology transfer opportunities with one of the world’s largest defense contractors.
As geopolitical tensions rise globally, particularly with concerns about Russia and China, demand for proven defense systems continues to grow. The four-year extension through 2029 positions both Lockheed Martin and Israeli defense industries to capitalize on this demand while deepening technological and industrial ties between the United States and Israel.
