Manufacturing February 15, 2026

Market Overview

Manufacturing activity in aerospace and high-tech supply chains is showing clear localization and resilience themes this cycle. Aerospace OEMs are shifting production closer to strategic customers and lower-cost hubs to secure deliveries and meet offset commitments, while semiconductor supply-chain policy risk is pushing governments and firms to prioritize stability and onshore capacity. Recent reports highlight Safran's moves to add landing-gear capacity in Morocco and to localize engine production tied to the Rafale program in India [1][3], and Beijing’s elevated focus on semiconductor supply-chain stability after a European ruling that affects Nexperia [5]. These developments reflect two concurrent manufacturing trends: geographic diversification of discrete manufacturing (aircraft systems) and policy-driven consolidation/reshoring in semiconductor-reliant sectors.

Key Developments

1) Safran landing-gear plant in Morocco: Safran announced plans to open a landing-gear plant in Morocco, signaling continued aerospace supply-chain expansion into North Africa to leverage cost, proximity to European OEMs, and workforce availability [1]. For manufacturers, this is a near-term capacity increase focused on discrete mechanical assemblies and potentially MRO-related activities [1]. 2) Safran engine production in India tied to Rafale offsets: Safran indicated readiness to open localized engine production in India as part of the Rafale deal, marking a strategic push to meet offset requirements and deepen manufacturing footprint in a fast-growing defense and civil aviation market [3]. This is likely to involve technology transfer, tiered supplier development, and integration of Indian vendors into global supply chains [3]. 3) Semiconductor supply-chain stability prioritized by China: Following a Dutch ruling impacting Nexperia, Chinese authorities flagged semiconductor supply-chain stability as a top priority [5]. For manufacturers across sectors, this increases the likelihood of policy actions, export controls, and support measures that will influence sourcing decisions, inventory strategies, and capital allocation for local fabs and packaging/test facilities [5].

Financial Impact

- Revenue and margin implications for OEMs and suppliers: Safran’s new manufacturing sites should support incremental revenue from defense and civil backlog and reduce logistics and lead-time costs over time, improving gross-margin profiles for landing-gear and engine sub-systems given higher utilization and localized supply chains [1][3]. However, near-term setup and CAPEX will pressure margins until steady-state production and supplier networks are established [1][3]. - Supplier opportunity and cost dynamics: Local suppliers in Morocco and India stand to win work from landing-gear and engine lines, creating new revenue pools for precision-machining, heat-treatment, and subassembly firms; conversely, incumbent European suppliers could face margin pressure from lower-cost competition [1][3]. - Input risk from semiconductors: Policy-driven supply-chain shifts in semiconductors could raise short-term procurement costs, push manufacturers to invest in inventory or dual sourcing, and increase capex toward qualified domestic components or assembly/test capacity, particularly for aerospace and defense electronics [5]. These actions may compress near-term free cash flow but reduce long-run operational risk.

Market Outlook

Over 12–36 months expect continued aerospace localization into Morocco and India as firms balance cost, political risk, and offset requirements—benefitting precision component suppliers and contract manufacturers that can scale to aerospace quality standards [1][3]. Increased policy attention on semiconductor supply chains will likely accelerate onshore investment and consolidation in packaging/test and substrate manufacturing, creating demand for capital equipment and skilled labor while transiently tightening component availability and pricing for manufacturers that rely on advanced chips [5]. Key risks: regulatory shifts that alter export rules, slower-than-expected ramp of local supplier ecosystems, and execution delays in plant commissioning. Active monitoring of Safran’s ramp schedules, supplier qualification pipelines, and semiconductor policy announcements will be essential for manufacturing-focused portfolio positioning.