The target acquisition systems market is anticipated to register a CAGR of more than 5.5% during the forecast period (2021-2030).
The global military spending increased by 2.6% to reach USD 1981 billion in 2020, according to the Stockholm International Peace Research Institute (SIPRI). Nevertheless, the defense spending may come down in the near future due to the global economic crisis triggered by the ongoing COVID-19 pandemic. This factor is expected to challenge the growth of the target acquisition systems market during the forecast period. The pandemic has resulted in few disruptions in the supply chains of major military vehicle and weapon system programs and has resulted in a reduction in production output. This has also negatively impacted the players in the related supply chains, like the target acquisition system providers.
The ever-increasing need to ensure national security against a variety of threats is forcing the militaries to modernize their military weapons and vehicle fleets with newer generation capabilities. This is driving them to procure new platforms featuring advanced target acquisition systems or to upgrade existing assets by integrating sophisticated sub-systems offering better target acquisition and designation capabilities. This factor is expected to drive the market growth in the years to come.
The ongoing advancements in automatic weapons systems and the increasing use of unmanned systems for intelligence, surveillance, target acquisition, and reconnaissance (ISTAR) purposes are expected to propel the growth of the target acquisition systems market during the forecast period.
Key Market Trends
The Land Segment Held the Largest Market Share in 2020
The land segment of the market accounted for a major share of the revenues in 2020. This was primarily due to the increased demand for missions involving terrestrial surveillance and target acquisition. Due to the growing border security threats and cross-border terrorism, the demand for surveillance vehicles and forward observation from a safe distance is increasing. Land-based target acquisition systems provide specific locations of threats from a safe distance, which can then be neutralized by forces without any harm to the observer. Several armies are procuring newer generation target acquisition systems for their frontline troops. In January 2021, Elbit Systems Ltd announced that its UK subsidiary, Elbit Systems UK Ltd, was awarded an approximately USD 137 million contract by the UK Ministry of Defence to provide the British Armed Forces with the future target acquisition solution for Joint Terminal Attack Controllers and Fire Support Teams under the Dismounted Joint Fires Integrators (“D-JFI”) program. The contract will be performed over a five-year period. The growing demand for the acquisition of armored vehicles is also expected to drive the growth of the land segment in the years to come. For instance, in May 2021, Rheinmetall BAE Systems Land (RBSL) was awarded a contract by the UK MOD to upgrade 148 British Army Challenger 3 Main Battle Tanks. The upgraded vehicle will be a network-enabled, digital Main Battle Tank with state-of-the-art lethality, upgraded survivability, and world-class surveillance and target acquisition capabilities. Thus, the growth in demand for associated platforms is expected to drive the demand for target acquisition systems in the land segment during the forecast period.
North America is Expected to Dominate the Market During the Forecast Period
In terms of geography, North America held the largest market share in 2020. The region is also expected to exhibit the highest growth rate during the forecast period as a result of a high demand from the United States. The huge military spending of the country toward developing advanced offensive and defensive military capabilities is generating the demand for newer generation target acquisition capabilities. As of 2019, Lockheed Martin was continuing the development of its Advanced Electro-Optical Targeting System (EOTS) for the F-35 Lightning II fighter aircraft. The Advanced EOTS will provide a range of multi-spectral sensing options, including high-resolution mid-wave infrared (IR), short-wave IR, and near IR. The advanced tracking system also provides greater reliability and reduced operational costs. Likewise, in June 2020, Applied Technology Associates (ATA) announced that it was awarded a contract for the Independent Target Acquisition and Tracking System (ITATS) as part of the US Army Directed Energy-Maneuver Short Range Air Defense (DE-MSHORAD) prototyping initiative. Furthermore, the focus of the country toward equipping its forces with newer generation situational awareness systems is also expected to drive the market growth. The US Army plans to field more than 120,000 custom, ruggedized versions of Microsoft’s HoloLens headsets as part of the Integrated Visual Augmentation System program, which integrates key capabilities such as high-resolution night, thermal and soldier-borne sensors, and radio communications into a single, lightweight wearable device. The system has also been fitted with rapid target acquisition and identification, performance assessment, and biometric applications. Such developments are anticipated to drive the growth of the market in the region during the forecast period.
Some of the prominent players in the target acquisition systems market are Elbit Systems Ltd, Leonardo SpA, Raytheon Technologies Corporation, Safran SA, and Thales Group, among others. The defense manufacturing industry is highly competitive, and with the evolving global battlefield environment, companies must align their product portfolios to the evolving requirements of end users. In order to gain long-term contracts and enhance the market share, players are investing significantly in the R&D of sophisticated product offerings. Furthermore, continuous R&D has been fostering the technological advancements in platforms and associated products and solutions of the active players in the target acquisition systems market. For instance, in June 2020, Thales unveiled the Sophie Optima Long Range handheld targeting system, the latest addition to its Sophie family of systems. According to the company, the new member of the Thales targeting binoculars portfolio offers better ergonomics, size, weight, and power (SWaP) characteristics, and superior performance. Such developments are expected to help the growth of the players during the forecast period.
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