Kawasaki Heavy Industries and Airbus, a major European aviation company, have formed a technical partnership for the joint development of a Japanese anti-submarine warfare derivative of the large unmanned aerial Euro drone. This partnership is driven by the growing importance of unmanned assets in Japan’s territorial waters defense and the strategic intent to avoid excessive reliance on U.S.-made equipment and secure data sovereignty.

Overview of the partnership and basic performance of Eurodrones

On June 26, 2026, Kawasaki Heavy Industries and Airbus Defence & Space announced that they had signed a memorandum of understanding (MOU) for the joint development of the anti-submarine warfare version of the Eurodrone for defense use. This partnership aims to verify the design and development of derivative models tailored to Japan’s unique operational environment, based on the Eurodrone, a medium-altitude long-endurance (MALE) unmanned aerial vehicle jointly developed by four European countries (Germany, France, Italy, Spain).

The Eurodrone is a large aircraft measuring approximately 16 meters in length, 30 meters in width, and with a maximum takeoff weight of about 11 tons, and is expected to have an appearance as shown in the diagram below.

Its main features are as follows.

• It can fly continuously for up to 40 hours, making it suitable for monitoring vast sea areas.

• The payload capacity excluding fuel reaches up to 2.3 tons.

• It also offers safety and redundancy intended for operation in airspace where civilian aircraft fly.

• It is capable of a wide range of missions, including intelligence gathering, target acquisition, maritime patrol, early warning, and anti-submarine warfare.

With this memorandum, both companies will begin concrete discussions on defining specifications for Japan, integrating Japanese-made sensors and weapons, and the participation of Japan’s defense industry in production and maintenance stages. This is an important step toward establishing a system that allows Japan to operate Eurodrones sovereignly without any restrictions.

Kawasaki Heavy Industries’ Proud Integration of Anti-Submarine Technology

The main reason Airbus chose Kawasaki Heavy Industries as its partner for this partnership is that the company possesses world-class technology and experience in anti-submarine warfare (ASW) equipment for the Japan Maritime Self-Defense Force. Kawasaki Heavy Industries, in collaboration with the Ministry of Defense, is developing and manufacturing the domestically produced fixed-wing patrol aircraft P-1, and as of September 2024, has delivered 35 units. The P-1 is equipped with acoustic detection systems, magnetic detectors (MAD), and sonobuoy drop capabilities, making it one of the most advanced anti-submarine capabilities by global standards.

Additionally, the company is a pioneer in submarine construction, having delivered over 80 submarines since the construction of the first domestically produced submarine in 1906. It has also been involved in the construction of the latest Taigei-class submarines, as shown in the diagram below, possessing technical expertise for both those detecting and operating submarines.

Kawasaki Heavy Industries’ defense-related business is expected to record sales of 429.7 billion yen in fiscal 2025, accounting for 18.6% of total company sales.

Under this partnership, Kawasaki Heavy Industries is considering integrating its submarine detection technology and data communication systems into the Eurodrone. Specifically, in addition to operating unmanned aircraft alone, the goal is to realize hybrid operations by coordinating with the manned patrol aircraft P-1 to drop sonobuoys and relay target information. By replacing long and dangerous patrol missions that are difficult for manned aircraft, drones are expected to dramatically improve personnel safety and surveillance capabilities.

Strategic Background and Economic Impact

Ensuring Data Sovereignty and Diversifying from U.S. Dependence

Japan’s interest in the Europe-led Eurodrone program is deeply rooted in issues of data sovereignty in defense equipment. The Japan Maritime Self-Defense Force has already officially decided to adopt the US-made MQ-9B Sea Guardian unmanned aerial vehicle, and plans to introduce a total of 23 aircraft between fiscal 2028 and 2032. However, when using U.S.-made systems, Japan has been pointed out as having “data sovereignty risks,” as it cannot be completely freely used by the collected data.

In the Eurodrone partnership, Airbus has made clear commitments to Japan on the following points.

• Japan can operate the data collected sovereignly without any restrictions.

• Allowing customization tailored to Japan’s unique operating environment.

• Enabling the integration of Japan’s unique sensors and armaments.

Japan’s postwar defense industry has developed around bilateral relations with the United States, but excessive dependence on specific countries carries risks such as supply chain disruptions and technological constraints. In recent years, the Japanese government has shifted toward diversifying sources of defense equipment procurement and actively promoting cooperation with fellow European countries, as seen in the Japan-UK-Italy Joint Development (GCAP) for next-generation fighters. The partnership between Kawasaki Heavy Industries and Airbus embodies this shift away from U.S. concentration and is significant for promoting technological exchange and strengthening the industrial base by allowing Japan’s defense industry to enter the European value chain.

Rapid Growth of the Defense Drone Market and Its Impact on Stock Prices

The defense drone market is rapidly expanding in response to rising global geopolitical risks. According to estimates by Frost & Sullivan, the defense drone market is projected to grow from about $15 billion in 2023 to over $30 billion by 2030. The renewed recognition of the effectiveness of unmanned aerial vehicles—capable of low-cost, advanced surveillance and strike—following the war in Ukraine and conflicts in the Middle East, has boosted drone-related spending in national defense budgets.

Entering such a huge market presents a major opportunity for Kawasaki Heavy Industries to expand its performance in the medium term. As of June 26, 2026, the company’s stock price is 2,836 yen, and major U.S. securities firms have set their target prices between 3,500 yen and 3,800 yen, maintaining their ratings from ‘neutral’ to ‘bullish,’ in light of the recent partnership and increased defense spending. Among investors, the following points are highly valued:

• Ensuring access to global defense networks through partnerships with major European companies.

• Ongoing orders are expected to come with the modernization of the Japan Maritime Self-Defense Force.

• Establishing a competitive edge in the highly unique niche field of anti-submarine technology.

However, there is a cautious view that, considering the development and evaluation timelines, a medium-term timeline of about three to five years is necessary for the defense drone business to truly contribute to profitability. By fiscal year 2027, the company aims to achieve a profit margin of over 10% in defense-related businesses, and attention is focused on whether this international joint development will serve as a strong driving force toward achieving this goal.

Future Outlook and Pathways to Practical Application

First Flight in 2029 and Complementary Relationship with the MQ-9B

Eurodrone’s development schedule is scheduled for its maiden flight in 2029, with mass production deliveries expected in the 2030s. Regarding anti-submarine warfare variants for Japan, detailed definitions of airframe configurations and technical verification are being conducted over the coming years.

Notably, it is related to the US-made MQ-9B Sea Guardian, which was already scheduled for introduction. As shown in the diagram below, the two aircraft have different characteristics in performance and applications, and may build a complementary relationship rather than a competition.

• MQ-9B Sea Guardian: Primarily designed for general-purpose wide-area surveillance and reconnaissance, efficiently gathering sea surface information.

• Euro Drone Anti-Submarine Type: Specialized in underwater threat detection centered on Kawasaki Heavy Industries’ sensor technology, responsible for tracking submarines.

The Ministry of Defense is urgently strengthening alert and surveillance capabilities in the vast Exclusive Economic Zone (EEZ) and the Southwest Islands, exploring the construction of a “multidimensional integrated defense force” that combines diverse drones to operate. By combining the existing P-1 patrol aircraft with the general-purpose MQ-9B and specialized Eurodrones, the goal is to establish a maritime surveillance system without blind spots while minimizing human risks for manned aircraft.

The Significance of Strengthening the Domestic Defense Industry and International Joint Development

This partnership is also extremely significant for maintaining and strengthening Japan’s defense production and technology base. Japan’s defense industry has long been placed in a closed market with only the Japanese government as a customer, facing challenges such as rising manufacturing costs, low profit margins, and a series of supplier withdrawals. In 2023, the government enacted the Defense Production Base Enhancement Law, positioning the defense industry as “defense capability itself” and strengthening support.

Kawasaki Heavy Industries’ move toward full-scale collaboration with major overseas companies like Airbus will connect Japanese technology, which had remained confined to the domestic market, to the international value chain, contributing to future expansion of business scale through exports and joint support. The insights gained from this partnership are expected to be utilized in the following areas.

• Japan’s unique accumulation of unmanned aircraft development and operational know-how.

• The possibility of future technology transfer to European naval powers (such as the UK, France, and Italy).

• A foothold for transferring defense equipment to friendly countries such as Southeast Asia and India.

Of course, risks such as soaring development costs and France’s withdrawal from the plan remain, and whether the June 2026 memorandum of understanding will progress into a practical joint development agreement depends on future negotiations. However, the decision by Japan and Europe to join forces with cutting-edge drone technology symbolizes that Japan’s security has moved beyond the boundaries of “only our own country” or “Japan-US only,” entering a new phase of international cooperation.

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