Defense Electronics Market

[386 Pages Report] The Defense Electronics Market is estimated to be USD 220.3 billion in 2023 and is projected to reach USD 289.0 billion by 2028, at a Compound Annual Growth Rate (CAGR) of 5.6% from 2023 to 2028. The Defense Electronics Industry is driven by factors such as strengthening of joint forces by investing in defence electronic systems and increasing need for AI and IoT devices in military operations.

Defense Electronics Market Forecast to 2028

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Defense electronics Market Dynamics:

Drivers: Growing Adoption of Integrated Defense Electronics Technologies

Ground units can dominate the modern battlefield due to new technological advancements, new weapon systems, and enhancements to existing weapon systems. In a time of constrained resources, the military primarily uses digital communications to enhance the informational components of existing weapon systems to maximize integration and sharing of information while denying a prospective adversary equivalent capability. Weapon systems must be converted from analog speech, video, and data transfers to digital coding to increase the amount of real-time information accessible to field commanders. A network connects weapon systems, aerial platforms, surveillance, and communication systems in the digitization of battlefield systems, enabling the exchange of massive volumes of data. Communication systems exchange information between the fighting, combat support, and combat service support functional areas of the battlefield.

Technological developments in military systems and equipment have resulted in significant improvements in defense electronics systems. The use of integrated defense electronics products provides multiple advantages, such as real-time decision-making, remote operations, and reprogramming of systems for defense against new and emerging threats. Defense electronics products, including integrated electronic warfare systems, enable communication with multiple other military defense systems, resulting in better-coordinated operations. Sensors and avionics can also be integrated with electronic warfare systems without undergoing technical changes. This reduces the system integration cost and ensures rapid deployment of the systems on various platforms.

Military aircraft need to be equipped with sophisticated electronic warfare integrated suites, such as anti-jamming devices since electronic jammers can cause the radar or electrical equipment of aircraft to malfunction. Since traditional countermeasure techniques are ineffective and obsolete, militaries are upgrading their aircraft with technologically advanced countermeasure techniques, such as anti-jammers, radar warning receivers (RWRs), laser warning receivers (LWRs), countermeasure dispenser systems (CMDS), and interference mitigation systems. Such benefits associated with the incorporation of integrated defense electronics products in the defense and military sectors contribute to the growth of the defense electronics market.

Restraints: Effect on Execution of Critical Defense Missions Due to Lack if Proper Communication Technology

Defense electronic products include electronic warfare systems, avionics, optronics, communication systems and command & control systems, which collect and transfer high volumes of sensitive data from handheld, electro-optic, and radar. Communicating and distributing such high volumes of data affects processing speeds in real time and could result in delays in decision making, thus threatening the execution of critical defense missions. Sophisticated communication technology infrastructure based on big data and efficient data centers is required to make real-time communication more effective. Such infrastructure requires a substantial investment, which is a major restraint for the defense electronics market.

The current network infrastructure for military forces in various countries across the globe seems to lack the capability to transfer such high amounts of data in real time. A more sophisticated infrastructure is required to facilitate effective real-time communication. Such infrastructure requires high capital investment and will substantially restrict the growth of the defense electronics market. While the implementation of the 5G technology can help, the cost of setting up a communication network and essential infrastructure is considerably high in several countries worldwide.

Opportunities: Increasing Need for AI and IoT Devices in Military Operations

AI and IoT have emerged as complementary technologies that find significant applications in the defense electronics industry for military exercises and critical missions. The constantly expanding network infrastructure and the increasing usage of electronic military devices in the defense sector worldwide will invariably require AI for categorizing, processing, fusing, and analyzing the big data generated. The data produced from defense electronic devices are heterogeneous in nature and require artificial intelligence for analysis. When merged with IoT, AI systems would be especially useful in regulating defense electronic products, including electronic warfare and military devices, by analyzing their transmitted data and controlling their operations to match user requirements. They can also coordinate and synchronize defense electronic products with other devices used in combat operations and efficiently modify their outputs.

AI-based projects deployed in the US defense forces include the Squad X Experimentation Program of Defense Advanced Research Projects Agency (DARPA), the OFFSET program, and Project Maven. Future and modern battlespace environments shaped by innovative technology will involve the growing use of defense electronic products and an integrated approach toward warfighting by combining land, air, space, and naval forces. Such environments will substantially require the implementation of AI and IoT technologies, which will support the growth of the defense electronics market over the projected timeframe. According to an article published in Shepard (UK) in November 2022, Future advancements could depend on cognitive electronic warfare (EW), which uses machine learning and AI to make decisions in microseconds to deal with combat circumstances.

In 2022, a Congressional Research Service publication on the Joint All-Domain Command and Control (JADC2) initiative claimed that crucial decisions in future conflicts must be made in hours, minutes, or seconds rather than over days. This will involve examining the operating environment and giving orders. The JADC2 program is a significant DoD endeavor to gather data streams from thousands of battlefield vehicles, environmental sensors, and other intelligent devices from every military branch. AI and ML provide pertinent data and enable speedy decision-making at the front lines.

Challenges: Increasing Cyberattacks on Trade Secrets and Defense-Related Data

Cyberattacks work best when combined with electronic warfare (EW), disinformation operations, antisatellite attacks, and precision-guided weapons in confrontations involving modern armies. The goal is to produce an operational advantage by deteriorating informational advantage, intangible assets (such as data), communications, intelligence assets, and weapon systems. The most harmful acts would combine cyberattacks and precision-guided bombs to disable or destroy crucial targets. Cyber operations can also be used to undermine decision making by defenders and stir up civil unrest by interfering with government, energy, transportation, and financial services.

Current cybersecurity solutions may fall short in terms of tackling advanced ransomware and spyware threats. Such incidents may affect the defense capabilities of different countries. The defense agencies of various countries across the globe constantly face the threat of cyberattacks. In July 2022, the Belgian government declared that three Chinese hacker gangs, a component of the well-known Chinese APT actors, had attacked Belgian military defense forces and civil services. Trade secrets and intelligence data were stolen by attackers supported by the Chinese government. In June 2022, Soft Cell (UK) released a brand-new remote access trojan (RAT) malware.

The Russia-Ukraine crisis, which started in February 2022, comprised physical combat that caused thousands of people to flee their homes and killed several civilians. According to FortiGuard Labs (US), new viper malware was used to attack Ukrainian targets, and the company found it installed on at least several hundred PCs there. Several Ukrainian organizations have also been the target of sophisticated operations that used the malware strands KillDisk and HermeticWiper, which seem to wipe data off of machines. It was discovered that bogus evacuation plan emails were used to spread Remote Manipulator System (RMS), a tool for remotely controlling devices in Ukraine. A wave of distributed denial-of-service (DDoS) attacks also hit Ukraine. These include interference with the networks of the Ministry of Defense and the military forces.

Industry players are launching new cyber security platforms and solutions to support the growth of the defense electronics market. AI-based cybersecurity solutions can independently gather data from various sources, analyze it, correlate it to the signals indicating cyberattacks, and take relevant actions. However, these solutions are under development, and cyberattacks continue to pose a threat to defense forces. While the innovative solutions and platforms provided by industry players will help reduce and tackle cyberattacks on military databases and devices in the future, the growing number of cyberattacks poses a major challenge to military agencies worldwide.

Defense Electronics Market Ecosystem

Prominent companies in this market include well-established, financially stable providers of defense electronics components. These companies have been operating in the market for several years and offer a diverse product portfolio, state-of-the-art technologies, and strong global sales and marketing networks. Prominent companies in this market include Elbit Systems Ltd. (Israel), Safran SA (France), Cobham Limited (UK), L3 Harris Technologies Inc. (US) and Raytheon Technologies Corporation (US).

Based on Vertical, the Optronics Segment is Projected to Grow at a Second Highest CAGR in the Defense Electronics Market During the Forecast Period.

Based on vertical, the defense electronics market has been segmented into navigation, communication, and display; C4ISR; electronic warfare; radar; optronics. The need to improve aims and intensify sights during operations is driving the optronics segment of defense electronics market.

Based on Platform, the Space Segment is Projected to Grow at a Second Highest CAGR in the Defense Electronics Market During the Forecast Period.

Based on platform, the defense electronics market has been segmented into airborne, marine, land and space. The space segment is expected to grow at a second highest CAGR during the forecast period. The increasing need for fast and secure data transfer and need for assistance in weather monitoring, surveillance & reconnaissance, navigation and communication is driving this segment of the market.

Asia Pacific is Expected to Account for the Highest CAGR in the Forecasted Period and Second Largest Share in 2023.

Asia Pacific is estimated to account for the highest CAGR in forecasted period and second largest share in 2023. The countries in Asia pacific region offer significant opportunities for defense electronics manufacturers as this region has been investing in development of modern technologies and procurement of new platforms. The increased demand for modern technologies and electronic warfare in countries such as Japan, India and China are driving the growth of this region.

Defense Electronics Market by Region

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Key Market Players

Players such as Hensoldt (Germany), Curtiss-Wright Corporation (US), Rafael Advanced Defense Systems Ltd. (Israel), Aselsan AS (Turkey) and Indra Sistemas SA (Spain). The report covers various industry trends and new technological innovations in the defense electronics market for the period, 2020-2028.

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Scope of the Report

Defense Electronics Market Highlights

The study categorizes the Defense Electronics market based on Vertical, Platform and region.

Recent Developments

• In April 2023, The US Navy has given a contract to CAES, a top supplier of mission-critical advanced RF technology, for the AN/ALQ-99 Low Band Consolidation (LBC) transmitter's initial pre-production stage. The AN/ALQ-99 Low Band Transmitter has been modified to become the LBC.
• In March 2023, Raytheon Technologies received a contract from the Space Development Agency to design, develop and deliver a seven-vehicle missile tracking satellite constellation for missile warning and tracking.
• In March 2023, The Swedish Defence Materiel Administration has awarded a contract to Elbit Systems Sweden AB, a subsidiary of Elbit Systems Ltd., to provide the Swedish Army with Technological High Mobility Shelters (THMS). The deal contains opportunities for additional extensions, and it will be carried out over a three-year period.
• In February 2023, The US Marine Corps awarded Northrop Grumman Corporation the initial production and operations contract for the Next Generation Handheld Targeting System (NGHTS). The NGHTS is a portable targeting system that offers high-precision targeting and can function in locations without GPS.
• In February 2023, A Memorandum of Understanding was inked by Thales Group and Bharat Dynamics Limited (BDL), a government-owned company, to establish manufacturing facilities for precision-strike 70mm laser guided rockets (FZ275 LGR) in India. This arrangement will allow BDL to provide a Made in India solution for the Indian Government's current Advanced Light Helicopters (WSI) and Light Combat Helicopter fleet.

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