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Farnborough, England, July 17 (Reuters) - Britain's Farnborough Airshow is expected to focus on the defense and arms sector amid rising security risks, as aircraft and arms manufacturers struggle to meet increasing demand for weapons while simultaneously working to solidify a fragile recovery in the production of civilian aircraft and engines .

With the war in Ukraine entering its fifth year and the ceasefire in the Gulf region collapsing, these risks are likely to push the traditional rivalry between Boeing and Airbus over commercial aircraft orders to a backlog during the show scheduled for July 20-24.

"It is fair to say that the security environment in the world today is more complex and volatile than we have seen for many decades, and we are seeing security threats evolve at a very rapid pace," said Air Chief Marshal Harf Smith, commander of the Royal Air Force, during an international conference of air force commanders ahead of the exhibition.

Arms manufacturers are participating in the biennial exhibition, which comes amid the largest increase in defense spending in Europe since the Cold War, and questions that remain about how and where this money is being spent.

One of the most influential figures in the sector warns that the shift towards drones and artificial intelligence systems could disrupt the defense sector to the same extent that SpaceX changed the rocket launch industry , as the wars in Ukraine and Iran reveal the need for faster development and large-scale production .

Tom Enders, former Airbus CEO and co-chairman of German defense startup Helsing, said, "I know the two worlds and they are very far apart."

Enders, who also heads tank manufacturer KNDS, added, "Startups are bold and don't shy away from risk. They spend their own money. Procurement agencies and the armed forces are increasingly realizing that this is the right path for a dynamic, fast-moving industrial sector ."

Some of the available budget funds will, of course, be allocated to purchasing warplanes and renowned fighters such as Lockheed Martin's F-35 and the Eurofighter, aircraft that will be featured in next week's air shows. However, startups like the US-based Andorel and Hellzing are pushing for the adoption of AI-powered systems, including swarms of unmanned combat aerial vehicles, despite initial setbacks.

"Valuations tend to favor newcomers to the defense sector, but... most militaries still spend the majority of their resources on manned platforms," said Byron Callan, managing partner at research firm Capital Alpha.

Organizers told Reuters that the defense sector will represent half of the exhibitors at the show, with 1,600 exhibitors this year, an unprecedented increase compared to about 40 percent previously, with a significant rise in artificial intelligence, advanced technology and finance companies.

Commercial aircraft sales and supply chains

On the commercial front, Airbus and Boeing are expected to announce new purchase orders and reveal the identity of the customers behind deals already concluded.

But with most available delivery dates running out well into the next decade, the usual media blitz is likely to attract less attention, as investors focus instead on aircraft deliveries, the area where manufacturers make most of their profits.

Air shows are still capable of producing surprises, but industry sources said the total number of deals may struggle to significantly exceed 300 aircraft, a level far below some pre-show forecasts that suggested as many as 800. The total may also include deals that have already been announced.

Separately, Air China said it would order 55 aircraft from Airbus.

"Winning orders is not the question," said Jerrold Landquist, managing director of the consulting firm The Landquist Group. "It is no longer as relevant a metric as it once was due to production capacity constraints."

The aviation sector has faced supply problems since the COVID-19 pandemic, particularly with regard to castings and forgings, which are vital parts manufactured to precise standards from molten or solid metal.

Resolving these issues is essential to achieving Airbus's repeatedly delayed goal of increasing single-aisle aircraft production by about 25 percent to 75 aircraft per month in 2027. Boeing, which is seeking to close the gap with its rival and minimize the decline in its market share, has indicated that it is considering raising production above current target levels.