From Paris to Abu Dhabi: Inside Thales' three-continent growth strategy and post-AI roadmap

Arabian Business

11-07-2025

Thales, the 130-year-old French global tech giant in defence, aerospace and cyber, is navigating a profound strategic shift as it positions itself for the post-AI era, while deepening its footprint across the Middle East and the United States.
In an exclusive interview, Chairman and CEO Patrice Caine outlined a bold vision that leverages quantum sensing technology, boosts R&D investments, and reflects a changing geopolitical landscape reshaping global defence markets.
'These quantum sensors will bring an improvement of at least 1,000 times in terms of performance,' Caine told Arabian Business, highlighting the scale of technological leap compared to artificial intelligence's typical gains of 10 to 100 times. 'This is not a 20 per cent or 30 per cent improvement. It's 1,000 times better so you totally change your scale.'
This represents what experts call 'the second quantum revolution.' While the first quantum revolution led to applications such as microelectronics, lasers and atomic clocks (enabling GPS), this second revolution exploits more advanced quantum phenomena such as state superposition and quantum entanglement to achieve breakthroughs in sensing, communications, and computing.
This quantum technology push forms a pillar of Thales' ambitious plan to increase R&D global spending to €5 billion ($5.8bn) by 2028, up from roughly €4 billion ($4.7bn) today. The investment underpins the company's effort to extend its competitive edge amid growing global tensions and rapid technological evolution.
A three-continent growth strategy
Central to Thales' strategy is a geographic realignment, with the Middle East and the United States emerging as primary growth engines, while Europe remains a potential — but uncertain — third pillar.
'Clearly when I look at strong areas of growth for us, the two main engines will be the Middle East in general and the US for different reasons,' Caine said. 'These are the two strong engines for the next decade.'
The United Arab Emirates stands out as a keystone in the company's expansion. Thales is preparing to launch its third global radar centre of excellence in Abu Dhabi within two years, joining already established hubs in France and the Netherlands.
'I've been proposing for a while to set up in the UAE a centre of excellence in one of our domains of excellence. And clearly our radar is probably the best in the world,' Caine said, underscoring the strategic importance of the Gulf region.
This move reflects a shift toward long-term partnerships centred on sovereignty and national capability-building. 'The UAE leadership has a strong appetite for high tech, and in particular, sovereign technologies,' Caine noted. 'Technologies that strengthen this country access to sovereignty in as many fields as possible.'
This partnership approach has already borne fruit. Thales recently secured a contract to build the airlock module for the UAE's contribution to the Lunar Gateway, a NASA-European Space Agency lunar outpost project.
Quantum as the next big bet
While AI remains central to Thales' product suite — employing approximately 800 AI specialists across centres in France, the UK, Singapore, and Canada — Caine acknowledges the company's gaze is shifting.
'AI, okay, that's more or less done,' he said. 'We have our plan. We have already embedded AI in our products. Things are in place. Now I'm really thinking of what will be next.'
This marks a notable inflection point for a company that, according to Chief Technology Officer Bernhard Quendt, has embedded explainable hybrid AI across hundreds of products, particularly in defence.
Caine emphasised the unique demands of defence AI — where explainability, frugality in processing, cybersecurity, and deep operational understanding are critical.
'In our safety-critical domains, you are able to understand why the result produced by an AI is as such, and if the result is wrong, then you can detect why it was wrong and potentially correct the artificial intelligence,' he explained, contrasting this with consumer AI, where such transparency is often lacking and also less useful.
Thales' AI-powered reconnaissance pods for combat aircraft — which the UAE is reportedly 'on the verge of acquiring' — and fully autonomous underwater mine-hunting systems for the UK and French navies showcase the blend of cutting-edge innovation and operational robustness.
These autonomous mine-hunting systems represent a significant shift in naval operations. They allow warships to remain in safe positions while underwater robots scan, identify, classify and neutralise mines without risking human lives. Since their initial development for the UK and France, more navies are now considering adopting this approach to mine warfare.
Thales has developed several advanced quantum technologies, including SQIF (Superconducting Quantum Interference Filter) technology for antenna miniaturisation and cold atoms techniques for quantum inertial units. The company is also working with SpeQtral on quantum satellite communications to test the transmission of entangled photons between space and Earth.
This work has taken on new urgency after recent reports that China may have made progress in breaking RSA encryption using quantum computing techniques. Thales' post-quantum algorithm 'Falcon' was one of just two algorithms selected by the NIST standardization body after years of international competition.
Defence R&D economics and funding model
Behind these tech ambitions is a funding model uniquely shaped by defence industry regulations. Approximately 75 per cent of Thales' R&D budget is customer-funded — mostly enterprise customers and government agencies — with the remaining 25 per cent self-funded.
'In a given country, by law, you cannot export defence equipment without government authorisation,' Caine said. 'Hence, you cannot build your own business case saying, 'I invest this much and then I will recoup my investment over the products I will sell worldwide.''
Maintaining this model, Thales' planned €5 billion R&D spend by 2028 corresponds to about 6 per cent of projected sales, sustaining the company's long-standing R&D intensity ratio.