In Villorba, a small town outside Treviso in northern Italy, a company called SUEX builds propulsion vehicles for military combat divers. Their NERO series can operate at depths of 200 metres, and each unit pairs wirelessly with others, allowing special operations teams to coordinate underwater movements without surfacing. SUEX is one of the few companies in the world, and the only one in Europe, building combat-grade diver propulsion vehicles at this performance level. Its competitors are American (STIDD) and a handful of German and Swedish-British firms (Rotinor, Torpedo SEAL) working at lower specifications.
Most people working in European defence technology have never heard of SUEX, and most have never thought about Italy's defence startup layer at all. The mental map of European defence tech runs through Munich, London, Tallinn, Stockholm. Italy barely registers. This is strange, because Italy has one of Europe's largest defence budgets, at €31.3 billion in 2025, and its defence expenditure is projected to grow to $61.7 billion by 2030, a compound annual growth rate of 11.9 per cent that outpaces most other major NATO European members. There is a real ecosystem beneath the surface. We mapped 52 Italian defence SMEs in our company directory, spread across three distinct geographic clusters, and what we found challenges every assumption about where interesting defence engineering happens in Europe.
Living in Leonardo's shadow
The reason Italy's SME layer stays invisible is structural, not accidental. Leonardo, the state-backed aerospace and defence group, dominates the Italian market in a way that no single company dominates German, Nordic or British defence. AIAD, the Italian federation of aerospace, defence and security companies, represents firms with a combined annual turnover of €15.3 billion and more than 50,000 employees. Leonardo and its divisions account for roughly 80 per cent of that turnover. Yet 75 per cent of AIAD's 250-plus member companies are SMEs.
Unlike Germany, where Rheinmetall, Hensoldt and Diehl share the spotlight, or the Nordic countries, where no single prime absorbs all the oxygen, Italy has one gravitational centre and everything else orbits it unseen. The SME layer exists in Leonardo's shadow, not in competition with it. Many of these companies are suppliers, niche specialists or research spinoffs filling capability gaps that a generalist prime cannot address.
Smaller Italian firms often outperform their parent ecosystem on profitability. A 2023 Mediabanca analysis of the Italian defence sector found that R&D spending averaged 6 per cent of revenues and EBIT margins rose from 5.7 per cent in 2021 to 6.2 per cent in 2023. Family-owned defence firms posted EBIT margins of 12.2 per cent, roughly double the sector average. These are not fragile startups burning venture capital but old, profitable, technically deep businesses.
SITTI, based near Rome, has been building tactical voice communication systems since 1946. Its MULTIFONO M800IP system serves the Italian Air Force. Drass, headquartered in Livorno, traces its roots to 1927 through the Galeazzi underwater technology company it later acquired. In 1937, that predecessor held the world record for deep diving with an atmospheric diving suit. Almost a century later, Drass developed the Italian Navy's next-generation submarine rescue system with Saipem. The average Italian defence SME is decades older than its Estonian or German counterpart, and for engineers, this translates to institutional knowledge, proven manufacturing processes and domain expertise that a three-year-old venture-backed startup simply cannot replicate.
Three clusters, three capabilities
The 52 Italian defence SMEs we track are not evenly distributed. They cluster around three geographic areas, each with a different industrial logic.
Rome and Lazio form the densest hub. Proximity to the Italian Ministry of Defence and military headquarters draws companies specialising in tactical communications, electronic warfare, ISR and command-and-control systems. SITTI anchors the tactical communications niche. IES (Ingegneria Elettronica Sistemi) works in electronic warfare. Lazio accounts for 30 per cent of Italy's national space exports, and companies like Aresys and DigitalPlatforms work at the intersection of defence sensing and space data processing. The Rome cluster feels closest to a conventional defence hub, the kind of ecosystem you might expect in any capital with a large military establishment. The difference is density. There are more companies here than the outside world realises, and most of them predate the post-2022 European rearmament wave by decades.
The Livorno-La Spezia naval corridor along the Tyrrhenian coast is Italy's historic naval and submarine region. Drass is the anchor, but there are firms working across underwater robotics, maritime sensing and naval systems. WSense builds Internet of Underwater Things platforms, including autonomous nodes for seafloor monitoring with clear dual-use applications in harbour defence and submarine detection. Italy's long coastline and Mediterranean geography have shaped an engineering culture around maritime problems that landlocked European defence hubs cannot match.
Southern Italy's space cluster is the one that breaks every expectation. Sidereus Space Dynamics, based in Salerno, is developing a containerized single-stage-to-orbit launch system called EOS. The company raised a €5.1 million seed round from Primo Space and CDP Venture Capital. Gomedia Satcom in Catania works on satellite communications. Nurjana Technologies in Sardinia does aerospace engineering and simulation. Campania, Sicily and Sardinia as a space technology corridor runs against every mental model of where European space companies should be, but the combination of lower operating costs, proximity to Mediterranean launch trajectories and strong regional university systems has produced a cluster that deserves more attention than it receives.
Beyond the three main clusters, Italian companies fill niches that few others in Europe attempt. Officina Stellare, near Vicenza, builds high-precision optical and opto-mechanical systems for space telescopes and satellite instruments. FlySight near Florence develops AI-powered drone detection and tracking systems. Victrix Armaments in Brescia, a city with a gunsmithing tradition stretching back centuries, makes precision rifles used by military and law enforcement snipers across Europe. D-Orbit, one of Italy's best-known space startups, provides in-orbit transportation and satellite deployment services. Each of these companies exists because of a specific Italian industrial tradition, whether optical precision in the Veneto, arms manufacturing in Brescia or space engineering in Lombardy.
What this means if you are looking for work
Italy's defence budget trajectory makes the hiring picture unusually attractive. Leonardo alone plans to expand its workforce from 62,700 in 2025 to roughly 75,500 by 2030, with 28,000 new hires planned across the period. The SME layer, which already employs a meaningful share of AIAD's 50,000-plus workforce, will need to scale alongside it as Italy pushes defence spending toward the NATO 2 per cent target.
The talent pipeline in European defence runs through a predictable set of cities. Almost nobody in the international engineering community considers Rome, Livorno or Naples as a base for defence technology work, which means less competition for roles at companies building genuinely interesting things. A systems engineer at SUEX works on underwater propulsion problems that most engineers in the sector never encounter. An EW specialist at IES or a submarine rescue engineer at Drass works in domains where Italy has capability that is difficult to find elsewhere on the continent.
These are not speculative employers either. The deep industrial heritage of Italian defence SMEs means you are joining a company with a track record of delivering military-grade products, not a pre-revenue startup hoping to win its first contract. The 12.2 per cent EBIT margins at family-owned firms are a proxy for financial stability. The cost-of-living calculus is different from northern European defence hubs too. Rome and Livorno are materially cheaper than Munich or London, and southern Italian cities even more so. Lower nominal salaries, but a different lifestyle and the chance to work on niche problems with high autonomy.
You can explore all 52 Italian defence companies on our interactive European defence tech map, and browse open roles across the continent on our jobs board. Leonardo's hiring plans and Italy's growing budget are the headline numbers, but the real discovery is the SME layer beneath, where companies that have been building military-grade technology for decades are just starting to become visible to the rest of Europe.
Stockholm
London