Beneath the waves, a silent revolution is brewing. Kongsberg, the Norwegian technology behemoth known for its defense systems and maritime expertise, is making moves that hint at a bold ambition: to become the undisputed leader in the global Autonomous Underwater Vehicle (AUV) market.

While much of the financial world focused on Kongsberg's record-breaking defense contracts and impressive growth in their Maritime division, a subtler story is unfolding in the depths. Kongsberg Discovery, the business area dedicated to subsea exploration and surveillance, reported a significant jump in HUGIN AUV orders in the recent quarter, a trend that began subtly in previous periods.

These aren't just any orders; two contracts, one commercial and one naval, each exceeded NOK 100 million, signifying a substantial increase in both customer interest and deal size. This suggests a growing confidence in Kongsberg's HUGIN technology and its potential to revolutionize underwater operations across diverse industries.

But why is the HUGIN AUV suddenly in such high demand? The answer lies in a confluence of factors that are quietly reshaping the subsea landscape. Kongsberg's own CEO, Geir Haoy, points to "the need to know more about the subsurface environment" and "security issues, for example, critical infrastructure."

This points to the first key driver: the increasing demand for detailed subsea knowledge. The world is awakening to the vast, untapped potential of the oceans, whether it's for renewable energy resources, deep-sea mining, or simply understanding the complex ecosystems that lie beneath the surface.

Kongsberg's HUGIN AUV, with its ability to operate autonomously for extended periods, equipped with sophisticated sensors and imaging equipment, is perfectly positioned to provide this crucial information. It can map the seabed, survey underwater structures, and monitor environmental conditions with an unprecedented level of accuracy and efficiency.

The second driver, security, is equally powerful. As geopolitical tensions rise and the focus on critical infrastructure protection intensifies, the need for robust subsea surveillance capabilities has never been greater. The HUGIN AUV's stealthy nature and advanced sensing capabilities make it an ideal tool for monitoring pipelines, cables, and other underwater assets, safeguarding them against sabotage, terrorism, or accidental damage.

Kongsberg's unique advantage lies not just in the technical prowess of the HUGIN AUV, but also in its strategic approach. The company has cleverly leveraged its expertise in both naval and commercial applications, creating a modular AUV design that can be readily adapted to a wide range of customer needs.

This ability to cater to both defense and civilian markets gives Kongsberg a distinct edge in a rapidly expanding global AUV landscape. The company is essentially positioned to capture demand from both sides of the equation – those seeking to explore and understand the ocean depths and those tasked with protecting critical underwater infrastructure.

While it's still early days, the signs are compelling. Kongsberg's recent surge in HUGIN AUV orders, coupled with the underlying market drivers of knowledge and security, strongly suggest that this Norwegian giant is poised to make a major splash in the global AUV market.

Hypothesis: Kongsberg AUV Revenue Growth

Based on Kongsberg Discovery's recent surge in HUGIN AUV orders and considering the underlying market drivers, we hypothesize that the company's AUV revenue could experience a growth rate of 25-30% annually over the next 3-5 years, significantly outpacing the broader AUV market growth.

While challenges remain, including competition and potential technological disruptions, Kongsberg's early momentum and strategic positioning suggest that the company is well-positioned to capitalize on the emerging AUV revolution and potentially establish itself as the dominant player in the years to come.

Supporting Numbers

Q4 2023

Two HUGIN AUV contracts exceeding NOK 100 million each (substantial increase in deal size).

Market Drivers

Global AUV market projected to grow at a CAGR of 15-20% over the next 5 years.

Kongsberg's Advantage

Modular AUV design caters to both defense and civilian markets, giving the company a wider customer base and a competitive edge.

"Fun Fact: Underwater Archaeology"

AUVs like Kongsberg's HUGIN are increasingly being used in underwater archaeology. They can create detailed 3D maps of shipwrecks and other submerged sites, helping archaeologists study these fragile artifacts without disturbing them.