Opinion
Low-cost interception systems and spectrum control are reshaping the battlefield
The economic efficiency of defense systems is becoming an integral part of military strategy, driving investors and companies in the defense and deep tech sectors to focus on technologies that can rebalance the equation.
Recent conflicts in the Middle East, alongside the war in Ukraine, are revealing a structural shift in how military advantage is defined. Military superiority, once anchored in highly advanced and costly systems, is now challenged by relatively simple and inexpensive weapons such as drones, creating a growing imbalance between the cost of defense and the cost of attack.
As a result, Israel is investing in multi-layered defense systems, including precision interceptors, advanced radar networks, and emerging laser systems. These capabilities provide a high level of protection, but at a substantial economic cost. Interceptor systems, both Israeli and American, range from tens of thousands of dollars per Iron Dome interception, to hundreds of thousands for systems like David’s Sling, and up to millions of dollars for Arrow systems or comparable U.S. systems. Estimates suggest that interceptor costs alone during the first 100 hours of the recent confrontation with Iran reached approximately $1.7 billion.
In contrast, many attacks are carried out using drones, loitering munitions, or relatively simple weapons costing only hundreds or thousands of dollars. This gap creates a reality in which defense responses are significantly more expensive than offensive ones, raising a broader strategic question: how can a sustainable defense model be maintained over time? Economic efficiency, therefore, is becoming a core component of military strategy, as technological innovation must now deliver both operational effectiveness and cost sustainability.
This dynamic is driving a shift among investors and companies in the defense and deep tech sectors toward technologies that can rebalance the economics of the battlefield. Rather than relying on complex and costly systems, there is growing emphasis on solutions that can be deployed at scale, at lower cost, and with sufficient operational effectiveness.
Several technological approaches are emerging to address this imbalance. One of the most prominent is lower-cost precision interception, such as Israel’s laser-based defense systems. While these systems require significant upfront investment, their marginal cost per engagement is extremely low, as they rely on electrical energy rather than physical munitions. Estimates suggest that such systems can intercept multiple aerial threats at a cost of only a few dollars per shot, illustrating their potential to fundamentally change the cost structure of air defense.
Additional solutions include small interceptor drones or micro aerial vehicles that detect threats and move toward them for direct impact. These systems can be divided into "hard-kill" approaches, where the interceptor collides with or detonates near the target, and "soft-kill" approaches, where the interceptor neutralizes the threat without destruction, for example through nets or other disabling mechanisms.
Another emerging category is loitering interceptors, small systems that patrol the airspace, identify targets using computer vision or short-range radar, and engage them directly. Ground-based systems are also evolving, such as smart cannons using programmable ammunition that creates a lethal envelope around the target, particularly effective against drones or small aerial threats.
Alongside these developments, detection and interception systems based on cameras, sensors, and compact radars, combined with artificial intelligence, are enabling earlier threat detection and more precise targeting, while reducing reliance on large and expensive radar systems.
Another domain gaining increasing importance in modern warfare is the ability to operate within the electromagnetic spectrum, particularly in environments where communications and GPS signals are disrupted or denied. Many existing systems rely heavily on satellite infrastructure and communication networks, making them vulnerable to electronic warfare.
As a result, there is a growing need for systems capable of navigating, identifying targets, and operating independently, even without external communication. These technologies rely on autonomous navigation through the integration of sensors, cameras, and computer vision, enabling systems to build an independent understanding of their environment. Dedicated algorithms allow drones and autonomous systems to map their surroundings in real time, identify objects, and navigate accordingly without relying on satellite signals.
In parallel, navigation systems are being developed that can continuously calculate position even without GPS, using onboard sensors and accelerometers to track movement and orientation. These systems enable continued operation in GPS-denied environments, while reducing drift through sensor fusion. At the same time, counter-technologies are being developed to disrupt enemy drones by interfering with their communication and navigation systems through radio frequency jamming.
These capabilities are becoming critical components of modern warfare. Control of the electromagnetic spectrum means the ability to continue operating within it despite attempts to disrupt it, while simultaneously denying the adversary its use.
For investors in the defense and deep tech sectors, significant opportunities lie in these technologies, particularly those that aim to solve the central equation of modern warfare: how to defend effectively against large-scale attacks without incurring unsustainable economic costs.
Evan Renov is Co-Founder and Managing Partner at Arieli Group. Lisya Bahar Manoah is Managing Partner at Arieli Group and Chairperson of the Board of Directors at Elron Ventures.
