Europe’s defence investment extends beyond expanding production lines to strengthening the research, testing and industrial capabilities needed to move advanced technologies towards production. The Dutch applied-research organisation occupies an intermediary position between the laboratory and the factory, translating scientific advances into technologies that manufacturers can integrate and armed forces can eventually deploy. Its challenge is to show that broad expertise can produce specific industrial results.
Europe’s defence expansion is often measured in ammunition orders, new factories and larger procurement budgets. Yet production cannot be increased simply by adding assembly lines. Advanced military systems depend on sensors, electronic warfare, artificial intelligence, secure communications, materials and space technologies that must first be developed, tested and validated.
Applied-research organisations occupy that intermediate stage. They convert scientific work into models, prototypes and tested components, reducing technical uncertainty before governments or contractors commit to larger programmes.
The European Defence Fund has a budget of nearly €7.3 billion for 2021–2027, supporting collaborative defence research and capability-development projects across EU member states. Under European Commissioner for Defence and Space Andrius Kubilius, that effort has increasingly focused on strengthening industrial capacity and encouraging cross-border cooperation.
The same priorities are visible in the Netherlands, where Defence Minister Dilan Yeşilgöz-Zegerius has sought to link military readiness more closely with domestic research, technology and production, creating a more favourable environment for organisations such as TNO, while raising expectations that public investment will lead to deployable capability.
For TNO, this creates opportunity but also a more exacting test: publicly supported research must help industry shorten development cycles and move useful technology towards production.
TNO brings broad scientific expertise into defence programmes
TNO was founded in 1932 and remains an independent public-law organisation rather than a listed company or conventional defence contractor. Its six units cover fields including defence and security, digital technology, energy, materials, health and high-tech industry.
The Defence, Safety and Security unit works across sensing technologies, communications, autonomous systems, advanced materials, modelling and systems analysis, alongside specialised defence research. Complex defence programmes increasingly require several of these disciplines to work together. TNO’s role is often to connect them early enough to identify technical gaps, test assumptions and reduce development risk before a programme moves towards industrial integration.
Breadth, however, is not the same as an industrial product. TNO must identify where its knowledge gives a programme a measurable advantage and where responsibility should pass to a manufacturer. Its value lies in bringing the right combination of expertise to a specific operational problem.
European partnerships demonstrate how TNO adds complementary expertise
TNO has built relationships with Germany’s Fraunhofer Society, Belgium’s imec, France’s CEA and Finland’s VTT. Much of that cooperation extends beyond defence into fields such as artificial intelligence, photonics, energy and digital technology, giving the organisations a base of shared expertise that can also support military and dual-use programmes.
Its recent work with VTT illustrates the practical value of those links. The two institutes are expanding their defence cooperation and have conducted drone testing at Finland’s OuluZone Drone Test Centre.
This is broadly how TNO fits into European programmes, like the EDF project “European Innovative GaN Advanced Microwave Integration” / AGAMI – EURIGAMI (development of the European Gallium Nitride technology and components capability for defense applications). It contributes selected capabilities — such as modelling, systems analysis, sensor expertise or testing — while other research institutes supply complementary knowledge and industrial companies take responsibility for integration and production. The arrangement allows partners to use specialised infrastructure across borders rather than reproduce it in every country.
TNO’s importance within such projects depends less on the size of the consortium than on the distinctiveness of its contribution. Participation does not guarantee ownership of the final system or future production revenue, but it can give TNO an influential role where its expertise helps determine whether a concept is technically viable, affordable and ready to move towards industrial development.
TNO converts public research into economic and industrial value
TNO’s finances reflect its position between the state and the market. In 2025, it reported €435.6 million in market revenue and €395.7 million in state funding. It recorded a net loss of about €2 million and employed 4,503 full-time-equivalent staff at year-end. Gross revenue in its Defence, Safety and Security unit rose to €235.7 million.
The increase in defence activity does not give TNO unlimited capacity. Tjark Tjin-A-Tsoi, its chief executive, has said the organisation must ‘deploy our scarce resources as effectively as possible’ and concentrate on areas where it has a ‘right to play’. That choice is becoming more consequential as demand grows across defence, artificial intelligence, semiconductors and the energy transition.
Because TNO is a public-law, not-for-profit organisation rather than a conventional company, its performance cannot be judged through market capitalisation or shareholder returns. Its economic contribution is better assessed through the value of commissioned research, income from licensing its intellectual property, and the value and employment generated by spin-off companies. TNO reported 51 spin-offs by the end of 2025, valued collectively at €710 million and supporting 908 jobs.
Those figures show that some research is moving beyond the laboratory, but they do not remove the risks involved in commercialisation. Hardware businesses may require years of engineering, certification and capital before reaching scale, while defence technologies remain dependent on procurement decisions that a research institute cannot control.
HYDIS²dp shows how TNO contributes to a pan-European defence ambition
The existing HYDIS² concept phase includes 19 partners and more than 20 subcontractors across 14 European countries. TNO’s listed EU contribution is approximately €1.19 million. A proposed follow-on consortium, HYDIS²dp, has been assembled to respond to a 2026 European Defence Fund tender and could include up to 28 partners and 20 subcontractors across 18 participating European states.
TNO’s publicly identified work is specialised. Along with France’s ONERA and Italy’s CIRA, it developed and refined threat models used to assess competing interceptor concepts. TNO has also described experiments using a two-stage light-gas gun to study interactions at hypersonic speeds. Its listed European Defence Fund allocation for the current phase is about €1.19 million.
An interceptor cannot be evaluated without credible models of the threats it is intended to defeat. TNO’s role is to help define those conditions and test aspects of the proposed response, not to claim responsibility for the entire system.
Although detailed work packages have not been disclosed and the proposal should not be treated as awarded revenue, the programme illustrates both TNO’s opportunity and its constraint. Europe needs institutions capable of combining national research strengths within multinational industrial programmes. It’s success will ultimately depend on whether the knowledge it contributes can move from research programmes into engineering decisions, industrial partnerships and technologies capable of being produced at scale.