Chile's major producer of ground-defense matériel, the Army Factories and Yards (Fábricas y Maestranzas del Ejército--Famae), which is subordinate to the army's Military Industry and Engineering Command (Comando de Industria Militar e Ingeniería-- CIMI), had been operating for 182 years in 1994. Famae employs about 3,000 people in factories throughout the country and is in charge of maintaining and renewing the army's equipment. Since the 1960s, Famae has assembled both the Belgian FN FAL rifle and its close-support version, the FN FAP, locally known as the FN FALO. More recently, Famae has also produced under license the Swiss SG542 assault rifle, which was replacing the SG-510 in service with the army. In addition, Famae is producing both a .32-caliber revolver and a 9mm submachine gun, together with 60mm, 81mm, and 120mm mortars, based on Brandt prototypes. An agreement with Britain's Royal Ordnance, signed in December 1989, provides for the joint development of the Rayo 160mm multiple-rocket launcher system, beginning in 1994. The Rayo was tested successfully in October 1991.

Famae produces ammunition for all these weapons, as well as hand grenades, Bangalore torpedoes, two types of antipersonnel mines, and an antitank mine, together with ammunition for the Oto Melara Model 56 105mm howitzer. Two types of antipersonnel bombs, two types of high-explosive aerial bombs, and one type of cluster bomb also have been developed, in conjunction with the FACh. These have been exported to Ecuador and Paraguay. Exports to Iran, Pakistan, and elsewhere also have been rumored. The revelation of contraband arms sales to Croatia via Hungary at the end of 1991 caused a minor political scandal early in 1992.

A new development beginning in early 1992 was the production of armored vehicles. Famae acquired a license to assemble the Swiss Mowag Piranha 8x8 APC. Prototype variations mounting either the Cockerrill 90mm or the Israeli HVMS 60mm high-velocity gun also have been produced. In 1992 Famae negotiated for the local manufacture of the Cadillac-Gage Stingray light tank. In early 1993, General Pinochet headed an official delegation that visited China. During the visit, an important agreement on military cooperation and coproduction of military equipment was signed between Famae and China's Northern Industrial Corporation (Norinco).

Data as of March 1994