The US defense market is anticipated to register a CAGR of over 5% during the forecast period (2020-2025).
- The growth in the defense budget is expected to be a major driver for the US defense market.
- In the United States, military spending has been considered to be the second-largest allocation in the federal budget, after social security. The country spending on its defense is greater than that of the cumulative defense spending of countries, like China, Saudi Arabia, Russia, the United Kingdom, India, France, Japan, Germany, and South Korea. For the year 2019, the US defense spending was USD 732 billion.
- Additionally, the fight against terrorism, externally and internally, is also expected to support the growth of the defense market in the United States.
- The growing investments in the procurement of advanced technology equipment to support the armed forces and replace the aging equipment are expected to propel the growth in the near future.
Key Market Trends
The Air Force Segment is Expected to Register the Highest Growth Rate During the Forecast Period
The air force segment is expected to experience the major growth in the US defense market during the forecast period, owing to various procurement plans for replacing aging combat aircraft, as well as procurement plans for new unmanned aerial vehicles. For FY 2020, the US Air Force has requested USD 165.5 billion, which may be used to fund new technology development. The increase in the amount may lead to funding for the next-generation fighter jets of the US Air Force. In October 2019, the US Department of Defense finalized an agreement to purchase additional Lockheed Martin F-35 Lightning II airplanes in a deal totaling USD 34 billion. A new report published in 2018 by the Center for Strategic and Budgetary Assessments (CSBA), approved by the US Congress, stated that the US Air Force required 386 operational squadrons, in order to counter any future threats posed by Russia and China. According to the study, there were shortfalls in the tanker, bomber, fighter, strike/reconnaissance drones, and command-and-control/intelligence, surveillance, and reconnaissance inventories. The study further revealed that the Air Force required 14 bomber squadrons, 62 fighter squadrons, 54 tanker squadrons, 27 strikes/reconnaissance drone squadrons, and 62 C2/ISR squadrons by 2030.
The US Air Force increased the use of unmanned aerial systems over the years, as enhancements in advanced navigation and communication technologies and the increase in military communications satellite bandwidth have made remote operations of unmanned aerial systems (UASs) more practical. Unmanned systems provide a sophisticated stand-off capability that supports intelligence, command and control, targeting, and weapons delivery, and improve situational awareness of the armed forces. The US Department of Defense increased the research and development funding for UASs, as they are inexpensive to produce, and the integration of new technology into their miniaturization has accelerated the development of many UAS types. Thus, upcoming procurements and R&D developments may propel the growth of the segment at a high CAGR during the forecast period.
The US Defense Market is Expected to Experience a Steady Growth in the Next Few Years
In 2019, the US military spending grew by 5.3%, thus, reaching USD 732 billion from USD 649 billion in 2018. The United States has the highest military spending in the world, and it accounted for 38% of the total global defense spending in 2019. For 2021, the US defense budget was USD 704.6 billion to improve military readiness and invest in the modernization of armed forces. The DoD (Department of Defense) made investments in hypersonic missile technology and autonomy in military and military electronics, such as sensors, integrated circuits, electronic warfare (EW), and power electronics, among others. The US armed forces have a fleet of 13,266 military aircraft, 39,253 armed vehicles, and 490 naval vessels. In order to enhance its military technologies, the country is investing heavily in the research and development of artificial intelligence (AI). The armed forces are integrating AI for ISR applications, command and control applications, enhancement of autonomy, and improvement of the lethality of weapon stations, among others. Various ongoing developments are expected to lead to the growth in the US defense market in the near future.
Various players, such as Lockheed Martin Corporation, The Boeing Company, Raytheon Technologies Corporation, General Dynamics Corporation, and Northrop Grumman Corporation, are expected to hold a significant share in the US defense market during the forecast period. Various initiatives and product innovations are done by companies to strengthen their presence in the market. In 2019, Lockheed Martin Corporation won a USD 879 million contract for the sustainment and maintenance of parts of the Minuteman III intercontinental ballistic missile. Additionally, in 2018, Northrop Grumman Corporation acquired an air force contract worth USD 3.6 billion for large aircraft infrared countermeasure equipment and support. The deal is expected to be completed by 2025. The provision of long-term contracts for the development of new military equipment and vehicles is anticipated to propel the revenues of various companies in the United States. For instance, in February 2019, Boeing unveiled an unmanned combat jet named Boeing Airpower Teaming System, which is designed to fly alongside manned aircraft in combat. The aircraft uses artificial intelligence to fly independently or in support of manned aircraft while maintaining a safe distance between other aircraft. The aircraft is scheduled to be launched in 2020.
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1.1 Study Assumptions
1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 PESTLE Analysis
5 US DEFENSE IMPORT AND EXPORT ANALYSIS
6 US HOMELAND SECURITY MARKET ANALYSIS
7 MARKET SEGMENTATION
7.1 Armed Force
7.1.1 Air Force
188.8.131.52 Training and Simulation
184.108.40.206 Communication Systems
220.127.116.11 Weapons and Ammunition
18.104.22.168 Manned and Unmanned Aerial Vehicles
22.214.171.124 Personal Training and Protection
126.96.36.199 Communication Systems
188.8.131.52 Weapons and Ammunition
184.108.40.206 Manned and Unmanned Ground Vehicles
220.127.116.11 Weapons and Ammunition
18.104.22.168 Sea-based Manned and Unmanned Vehicles
22.214.171.124 Communication Systems
8 COMPETITIVE LANDSCAPE
8.1 Vendor Market Share
8.2 Company Profiles
8.2.1 Lockheed Martin Corporation
8.2.2 The Boeing Company
8.2.3 Raytheon Technologies Corporation
8.2.4 General Dynamics Corporation
8.2.5 Northrop Grumman Corporation
8.2.6 L3Harris Technologies Inc.
8.2.7 BAE Systems PLC
8.2.8 CACI International Inc.
8.2.9 Textron Inc.
8.2.10 Elbit Systems Ltd
8.2.11 General Electric Company
8.2.12 Navistar Defense LLC
9 MARKET OPPORTUNITIES AND FUTURE TRENDS
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.