The Most Significant Catalyst to this Market Has Been the Enormous Growth of Interest in UAVs by the US Military
In terms of worldwide military budgets, the unmanned aircraft systems (UAS) segment continues to see growth, although annual growth has moderated when compared to a decade ago. The unclassified sector will continue to increase over the next decade, by about 41%, from current annual spending on RDT&E and procurement of about $13.2 billion in FY23 to about $18.7 billion in FY32 (a CAGR of 3.9%). If operations and maintenance expenditures were to be added, these totals would be greater.
This growth is being driven by the continued adoption of unmanned aerial vehicles (UAVs) worldwide. Over the next decade, unclassified US procurement will grow modestly. The big issue for the US drone sector is the extent of secret “black” drone programs.
Growth will increasingly shift towards international markets as more militaries adopt the lessons of Iraq, Afghanistan, Syria, Libya, Nagorno-Karabakh, and Ukraine and incorporate UAVs into their forces. The introduction of specially built unmanned combat air vehicles (UCAVs) also promises to drive growth over the next decade.
Research Coverage
This annual sector study allows clients to identify lucrative potential business opportunities in the increasingly dynamic international military UAS market. It contains a wealth of timely intelligence and analysis on the systems, as well as requirements on a country-by-country basis.
Features include:
- 10-Year Market Forecasts - Covering R&D and procurement for the overall market and, as well as program and country breakouts. (Spreadsheets are included)
- Expert Analysis - A cogent outlook and rationale for what will be hot over the next decade.
- Air Vehicles - Development histories, specifications, functional descriptions, manufacturers, funding and evaluations.
- Sensors - Electro-optic, infrared, synthetic aperture radar, electronic warfare, SIGINT, and multi- and hyperspectral systems.
- Requirements - Future requirements are examined for each country likely to be a player in this market.
- Competitors - Initiatives of roughly 60 key companies: product offerings, investment activities, acquisitions and important developments.
Table of Contents
Executive Summary
Now, for the seventh year, the analyst has separated all civil government and commercial UAVs into a separate study in recognition of the strong potential for the future as airspace begins to open worldwide.
Please note that in the tables and charts “procurement” and “production value” are two different, but related numbers. Procurement, covered in the budget forecasts here, represents the annual amount of production funding included in a country’s annual defense budget, usually on a fiscal-year basis. Production value, covered in the numerous tables in this study, represents the value of UAV systems delivered during a calendar year. In rough terms, the funds “procured” during one-year result in “delivered" units the following year or two after.
The most significant catalyst to this market has been the enormous growth of interest in UAVs by the US military, tied to operations in Iraq and Afghanistan, as well as the general trend towards information warfare and netcentric systems. UAVs are a key element in the intelligence, surveillance, and reconnaissance (ISR) portion of this revolution, and they are expanding into other missions as well with the advent of hunter-killer UAVs. The reason for the slow-down in US growth has been the decline of US unclassified procurement over the past decade with the end of the wars in Iraq and Afghanistan. The US military currently has the world’s largest and most sophisticated drone fleet, with the rest of the world only beginning to catch up.
This research finds that the US will account for 71.9% of the unclassified R&D spending on UAV technology over the next decade, and about 34% of the unclassified procurement through the forecast decade. These US UAV funding shares for R&D and procurement represent slightly smaller shares of the market compared to defense spending in general. The US accounts for about 75% of total worldwide R&D spending and 35% of procurement spending, according to the analyst's International Defense Briefing forecasts.
These percentages change significantly when adjustments are made for US classified UAV development and procurement funding. The value of these “black” programs can only be surmised. With these assumptions, the US accounts for 81.3% of the world R&D on UAVs and 47.8% of the procurement.
This difference is due to the heavier US investment in cutting-edge technologies and the marked lag-time in such research and procurement elsewhere, especially major aerospace centers such as Europe. This follows trends in other cutting-edge technologies observed over the past decade by analysts in such areas as precision-guided weapons, information and sensor technology, and military application of space systems.
A tangible example of the “black” UAV budget in the US is the RQ-170 Sentinel program which only came to light when one of the stealth drones came down in Iranian territory. Recent revelations about the RQ-180 provide another example.
The analyst expects that the sales of UAVs will follow recent patterns of high-tech arms procurement worldwide, with the Asia-Pacific area representing the second largest market, followed by Europe. Indeed, the Asia-Pacific region may represent an even larger segment of the market, but several significant players in the region, namely Japan and China are not especially transparent about their plans compared to Europe. As in the case of many cutting-edge aerospace products, Africa and Latin America are expected to be very modest markets for UAVs.
Some warnings are needed when viewing the summary tables and charts here. There appear to be wide swings and dips in unit acquisition over the forecast decade, that is not matched by similar swings in the production value. This is primarily due to the volatile mini-UAV market, which represents exceptionally large numbers of air vehicles even though unit costs are extremely low compared to other UAVs, especially the endurance types. This forecast expects a drop in US mini-UAV acquisition as combat operations wind down in Iraq and Afghanistan, which has a significant effect on unit numbers, though not on dollar values. It is also important to note that the analyst is not yet including forecasts for quadcopters, or very small and inexpensive micro-UAVs. In many cases, these are being obtained off-the-shelf from the commercial market, and the unit cost is too low for any form of tracking. In addition, the large numbers likely to be acquired tend to grossly distort the unit forecast numbers.
Companies Mentioned
- Aeronautics Ltd.
- AeroVironment Inc.
- Airbus Defence & Space (formerly European Defence and Space Co.)
- Aurora Flight Sciences
- Aviation Industry Corp of China (AVIC)
- BAE Systems
- Baykar Makina
- Bell Textron
- CAE Inc.
- China Aerospace Science and Technology Corp.
- Dassault Aviation
- Denel Pty. Ltd.
- Diehl Defence GmbH & Co. KG
- DJI Innovations
- Elbit Systems Ltd.
- EMT Ingenieurgesellschaft
- General Atomics Aeronautical Systems, Inc.
- Griffon Aerospace
- Honeywell International Inc.
- Insitu Inc.
- Intra Defense Technologies
- Israel Aerospace Industries Ltd.
- Kaman Aerospace Corp.
- Korea Aerospace Industries Ltd
- Korea Aviation Technologies
- Korean Air Aerospace Business Division
- Kratos Defense and Security Solutions Inc.
- L3Harris Technologies
- Leidos Holdings Inc.
- Leonardo (formerly Finmeccanica)
- Lockheed Martin Corp.
- MacDonald, Dettwiler, and Associates (MDA) Ltd.
- Northrop Grumman Corp.
- Parrot SA
- Piaggio Aerospace
- Raytheon Technologies Corp
- Rolls-Royce
- Safran
- Saudi Arabian Military Industries
- Schiebel Elektronische Geraete GmbH
- Sikorsky Aircraft Corporation
- Skydio
- Stark Aerospace, Inc.
- Swift Engineering, Inc.
- Teledyne FLIR (formerly FLIR Systems, Inc.)
- Teledyne Technologies Inc.
- Textron Systems Unmanned Systems
- Thales
- The Boeing Co.
- Turkish Aerospace Industries
- Uconsystem Co. Ltd.
- UMS Skeldar
- VTG
Methodology
The publisher's analysts employ a combination of empirical and expert centered approaches to forecasting across multiple global defense and aerospace markets. Numerous variables play into future market requirements: macroeconomics, geopolitics, regional competitiveness, public and private market forces, cost pressures, country‐specific budget constraints, supplier relationships, etc.
We maintain proprietary databases that provide a strong foundation for building a quantitative understanding of key relationships between the forces that drive the demand for an array of products, platforms, and systems. These data assets have been developed and expanded over 30 years of company operations and provide an unapparelled set of resources that make the publisher uniquely qualified to forecast future industry performance. These empirical fundamentals allow for rigorous modelling.
In addition to this highly structured, data-driven perspective, the publisher through the expertise of its analysts has a comprehensive qualitative understanding of the forces that shape market demand. It is our position that forecasting demands both empirical understanding and artistic interpretation based on insights gained from decades of dedicated research and analysis. The result is a forecast that combines both to achieve a highly informed window to the future.
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