Defense Electronics Market Report 2025

The defense electronics market size has grown strongly in recent years. It will grow from $231.84 billion in 2024 to $245.82 billion in 2025 at a compound annual growth rate (CAGR) of 6%. The growth in the historic period can be attributed to global military threats, modernization programs, cybersecurity concerns, counterterrorism operations, and the emergence of asymmetric threats.

The defense electronics market size is expected to see strong growth in the next few years. It will grow to $305.52 billion in 2029 at a compound annual growth rate (CAGR) of 5.6%. The growth in the forecast period can be attributed to emerging technologies integration, focus on cyber resilience, unmanned systems and autonomous technologies, interconnected battlefield, and shift towards electromagnetic spectrum operations. Major trends in the forecast period include the development of next-generation radar systems, the use of gallium nitride (GaN) technology, the rise in unmanned systems electronics, the deployment of cognitive electronic warfare systems, focus on miniaturization and swap optimization.

The anticipated increase in defense expenditure is set to drive the growth of the defense electronics market. Defense expenditure, commonly known as military spending or defense budget, refers to the financial resources allocated by a government or nation to support defense and military-related activities. Within defense expenditures, a significant portion is typically dedicated to defense electronics, encompassing electronic equipment such as air defense radars and communication systems. As evidenced by the Ministry of Defense (MOD) departmental resources 2022, published by the UK government in December 2022, defense spending for the fiscal year 2021-2022 amounted to $58.39 billion (£45.93 billion), marking an 8.4% increase compared to the previous year's $53.85 billion (£42.365 billion) in 2020-2021. This substantial increase in defense expenditures underlines the driving force behind the growth of the defense electronics market.

The escalating cybersecurity threats are poised to further propel the expansion of the defense electronics market. Cybersecurity threats involve malicious activities and potential dangers that exploit vulnerabilities in computer systems, networks, software, and data. The defense electronics market plays a crucial role in strengthening cybersecurity measures, safeguarding military and infrastructure networks against evolving threats. Despite the increasing frequency and sophistication of cyberattacks, defense electronics technologies are instrumental in enhancing security rather than contributing to risks. A notable example is the data from CompTIA, a US-based non-profit trade association, which reported a 48% increase in phishing attempts in the first half of 2022, with 11,395 occurrences costing firms a total of $12.3 million. The rising incidence of cybersecurity threats, including a 41% increase in ransomware attacks, underscores the imperative role of defense electronics in addressing these challenges and driving the growth of the defense electronics market.

Product innovations stand out as a prominent trend gaining traction in the defense electronics market. Major companies within the defense electronics sector are actively engaged in the development of cutting-edge technologies to fortify their market positions. An illustrative example is BAE Systems plc, a UK-based aerospace company, which introduced the Storm EW (Electronic Warfare) Modules in March 2022. These modules are designed to provide specialized offensive and defensive electronic warfare (EW) mission systems, offering warfighters situational awareness, survivability, and electromagnetic capabilities. The Storm EW Modules leverage a common core architecture, facilitating the rapid deployment of software-based EW capabilities. This scalable design allows for adaptability and integration across various airborne platforms, including fixed- and rotary-wing aircraft, unmanned aerial vehicles, and guided missiles.

Major players in the defense electronics market are actively pursuing the development of new technologies to maintain their market dominance. The integration of cutting-edge technologies, such as artificial intelligence (AI), quantum tech, and directed energy weapons, significantly enhances the capabilities of defense electronics. For instance, Lockheed Martin, a prominent US-based aerospace, arms, defense, and technology corporation, collaborated with Red Hat Software in October 2022. This collaboration aimed to advance artificial intelligence (AI) innovation at the edge on Lockheed Martin military platforms. Through the use of Red Hat Device Edge, Lockheed Martin could incorporate sophisticated software onto smaller platforms, such as the Stalker unmanned aerial system (UAS), that were previously constrained by size and complexity. This technological advancement enables smaller platforms to handle substantial AI workloads, enhancing their field performance and expediting data-driven decision-making processes.

In February 2023, Lockheed Martin, a defense and aerospace manufacturer based in the U.S., formed a partnership with Northrop Grumman. This collaboration aims to enhance Lockheed Martin's next-generation electronic warfare systems and bolster its capabilities in radar and sensor technologies. The focus of this partnership is on developing integrated solutions to enhance the defense systems of fighter jets, thereby advancing the electronic warfare and communications infrastructure of the U.S. military. Northrop Grumman is a multinational aerospace and defense company in the U.S. and one of the largest manufacturers of weapons and military technology.

Major companies operating in the defense electronics market include Raytheon Technologies Corporation, The Boeing Company, Lockheed Martin Corporation, General Dynamics Corporation, Mitsubishi Electric Corporation, Honeywell International Inc., Northrop Grumman Corporation, BAE Systems plc, Safran S.A., Thales Group, L3Harris Technologies Inc., Leonardo S.p.A., Textron Inc., Rheinmetall Electronics GmbH, Elbit Systems Ltd., Serco Group plc, Indra Sistemas S.A., Saab AB, Airbus Defence & Space GmbH, Rafael Advanced Defense Systems Ltd., Bharat Electronics Limited, Hensoldt AG, LIG Nex1 Co. Ltd., Ultra Electronics Holdings plc, Kratos Defense & Security Solutions Inc., Terma A/S, Tata Advanced Systems, Samsung Techwin Co. Ltd., Data Patterns Ltd., Rockwell Collins Inc.

North America was the largest region in the defense electronics market in 2024. The regions covered in the defense electronics market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the defense electronics market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Italy, Spain, Canada.

Defense electronics encompass electronic systems and components engineered to achieve technological superiority in national defense. These advanced systems are developed with cutting-edge technological sophistication to provide the latest capabilities for a country's security. They find multiple military applications and can be deployed across diverse environments, including space, land, and sea.

The primary components of defense electronics include hardware, software, and services. Hardware constitutes the physical components or machinery of electronic devices, such as integrated circuits (ICs), crucial for the operation of microprocessors and memory units within defense systems. Various types of equipment within defense electronics encompass C4ISR systems, weapon systems, electro-optical and infrared (EO/IR) systems, military simulators, radar systems, sonar systems, avionics, electronic warfare, and other technologies. These systems are deployed across various platforms including airborne, marine, land, and space for defense applications.

The defense electronics services research report is one of a series of new reports that provides defense electronics market statistics, including the defense electronics industry's global market size, regional shares, competitors with an defense electronics market share, detailed defense electronics market segments, market trends and opportunities, and any further data you may need to thrive in the defense electronics industry. This defense electronics market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

The defense electronics market includes revenues earned by entities by providing system integration, supply chain management, and maintenance and repair services. The market value includes the value of related goods sold by the service provider or included within the service offering. The defense electronics market also consists of sales of infrared (IR) and radio frequency (RF) remote controls, radiation-hardened (RADHARD) electronics, and GPS-enabled guidance, mapping, & geolocation devices. Values in this market are ‘factory gate’ values, that is, the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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