Precision Guided Munition Market

Market Overview

The Total Addressable Market (TAM) for Precision Guided Munition was valued at USD 32.9 billion in 2021. It is expected to reach USD 51.92 billion by 2030, growing at a CAGR of 5.2% during the forecast period (2022–2030).

Precision has long been acknowledged as a crucial component of weapon development. The precision-guided munition is a weapon that can be pointed at and fired at a single target. Such weapons rely on an internal or external guidance system. From aircraft, submarines, ships, land vehicles, and even from individual soldiers on the ground, precision-guided munition can be launched. Hellfire missiles, JAGMs, Paveway laser-guided bombs, long-range anti-ship missiles, and other precision weapons are air-launched precision munitions. While army tactical missile systems (ATACMS), guided multiple rocket launch systems (GMLRS), and precision strike missiles (PrSM) are examples of ground-launched precision munitions.

Market Dynamics

Market Drivers

Growing Demand from Defense Organizations for Precision-Guided Missiles and Rockets

Rising national security concerns and the idea that some nations will cede their security, diplomatic, and economic interests to others are anticipated to fuel the growth of missiles and rockets in the defense industry, adding growth opportunities to the overall market for precision-guided munition over the forecast period. The development of telecommunication technologies has undergone radical change due to the evolving nature of the global economy, further enhancing the effectiveness of missiles and rockets in combat situations.

The critical component of military operations is the extensive use of global positioning systems and inertial navigation systems, which can pinpoint the target, whether stationary or mobile and accurately target and destroy it with the least amount of time and collateral damage. Although the U.S. has one of the most advanced arsenals of conventional weapons in the world, including missiles and rockets, many of its strategic weapons are rapidly deteriorating, which is why a large budget is set aside to update the entire nation's defense system. The modernization of tactical weapons and air-launched cruise missiles is anticipated to accelerate over the forecast period.

Rising Military Spending

The United States has always led the world in defense spending, and the new administration also focuses on bolstering the military. This rise in spending is anticipated to continue over the forecast period. In order to counter potential threats from the Middle East and Russia, the NATO (North Atlantic Pacific Organization) countries have also started plans to increase their defense budgets. In addition, several nations, including China, India, and Japan, have significantly increased their defense spending due to ongoing security threats and intensifying geopolitical pressures. Rising geopolitical tensions in the Middle East and North Korea are also anticipated to fuel demand for defense equipment during the forecast period.

Market Restraints

Economies with a Low Deficit Budget and Technology

The United States, China, India, Russia, and the United Kingdom are the top defense-spending countries in the world. They hold a sizable market share for precision-guided weapons compared to other nations. For instance, compared to their regional counterparts, including China and India, the economies of Bangladesh, Sri Lanka, the Philippines, Malaysia, and Indonesia have significantly lower defense budgets. Low industrial output, unstable political environments, and unstable economies contribute to low defense spending.

Furthermore, Belarus, Czechia, Austria, and Finland are among the nations in Europe that are affected by this situation. The targeted economies also lack defense technology and rely heavily on American, Chinese, Russian, and French technological advancements. Furthermore, the demand for advanced weapon systems is constrained by a lack of infrastructure and technologically advanced equipment. Consequently, hurting the demand for precision-guided ammunition.

Market Opportunities

Development of Advanced Air and Missile Defense Systems

High-tech new-generation missile development poses a serious risk to strategic locations and platforms like military ships and air bases. High-speed cruise missiles and nuclear-capable ballistic missiles are some of these recent innovations. Many nations are working on highly sophisticated weapons that can overcome sophisticated air defense systems like the Patriot Advanced Capability-3 (PAC-3), the S-400, and the Medium Extended Air Defense System (MEADS).

Additionally, hypersonic missiles have been developed by nations like India, China, and Russia and are challenging for missile defense systems to intercept. The BrahMos missile, jointly developed by India and Russia, is challenging for older missile defense systems to intercept. Due to these developments, new-generation high-speed air defense electronic warfare systems are now necessary. While governments worldwide concentrate on developing stealth aircraft, they also invest significantly in cutting-edge surveillance systems to counter stealth technology.

Regional Analysis

By region, the global precision guided munition market is segmented into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant shareholder in the global precision guided munition market and is expected to grow at a CAGR of 7.2% during the forecast period. The main drivers of the expansion of the defense industries in the region are the escalating geopolitical conflicts and the growing threat of terrorist attacks. In response to growing national security concerns, nations like China and India are investing in modernizing their armed forces to combat violence. These factors are anticipated to drive the market demand for precision-guided weapons over the forecast period. In several nations, including India, Vietnam, Taiwan, and South Korea, escalating conflicts and border confrontations are predicted to increase demand for cutting-edge weaponry. Furthermore, it is anticipated that rising Chinese interference in the Indian Ocean and China's frequent territorial disputes with nations like India, Taiwan, Indonesia, Vietnam, and South Korea will boost demand for precision-guided munition on both sides of the conflict and drive market expansion.

Europe is expected to grow at a CAGR of 5.8%, generating USD 14,777.79 million during the forecast period. Rising terrorism incidents are also anticipated to broaden the scope of advanced weapon system development by various regional nations, including Northern Ireland, France, Germany, and Spain. Additionally, the European Union decided to fund the European Defense Industrial Development Program by investing in the defense sector in April 2021. The joint development of Europe's defense industry is the primary goal of this program. In order to support defense cooperation in Europe, the European Defense Fund (EDF) has raised a budget of USD 9.3 billion. It is also anticipated to promote a cutting-edge and aggressive defense industrial base for the defense weapons system. It is assumed that this will add growth prospects to the market for precision-guided munition during the forecast period.

North America is expected to grow significantly over the forecast period. The market for precision-guided weapons in North America is expected to expand due to military development by nations like the United States, Canada, and Mexico. Additionally, purchasing missiles, rockets, and torpedoes for the military, navy, and air force operations is anticipated to provide market expansion opportunities. The U.S. and Canada's increased defense spending in North America has significantly impacted the expansion of the regional market.

Emerging nations like Brazil and Argentina are anticipated to experience the fastest industrial and manufacturing growth over the forecast period. Additionally, several businesses' growing desire to locate their manufacturing facilities in the area is aiding the market's expansion. Governments in the region have opened the door for foreign investment in the defense sector, particularly in Brazil, through public-private initiatives. The establishment of manufacturing businesses and subsidiaries in the region, such as Lockheed Martin Cooperation for Latin America, has been aided by the demand for weapons and equipment on the American market. Due to the frequent border disputes and terrorist activities, it is also anticipated that rising defense spending from nations like Brazil, Colombia, and Chile will contribute to market growth.

Factors driving the market growth in the Middle East and Africa include the countries' rapid economic growth and significant investments in the defense sector due to the rise in transnational threats. Additionally, several governments, including those in Saudi Arabia and Iran, are bolstering their armed forces to stop ongoing illegal activities, creating favorable conditions for regional market expansion. Two key factors anticipated to positively impact the market's growth are the rise in terrorist activity in the region and government initiatives to modernize military equipment. Israel has benefited from substantial economic and military assistance from the United States, which has fueled the growth of the defense sector there as well as other related industries over the forecast period.

Segmental Analysis

The global precision guided munition market is segmented by product and technology.

By Product Analysis

Based on product, the global precision guided munition market is bifurcated into tactical missiles, guided rockets, guided ammunition, and loitering munition.

The tactical missiles segment is the highest contributor to the market and is expected to grow at a CAGR of 6.3% during the forecast period. Ballistic and cruise missiles are the two main categories of guided or long-range missiles. Air-breathing engines that provide continuous propulsion at a lower altitude power cruise missile. The shorter flight time of ballistic missiles makes them more difficult to intercept than cruise missiles. Ballistic missiles are trajectory-based. However, cruise missiles are more affordable, adaptable, and mobile, which is expected to increase demand for the missile above and drive up the market for precision-guided munitions.

Advancements in guided systems for rockets are anticipated to increase their market share in precision-guided munition production over the forecast period. Additionally, a low-cost, lightweight, and portable rocket propelling system is anticipated to expand the market's growth opportunities for guided rockets.

By Technology Analysis

Based on technology, the global precision guided munition market is bifurcated into an infrared, semi-active laser, inertial navigation system (INS), a global positioning system (GPS), radar homing, and anti-radiation.

The global positioning system (GPS) segment owns the highest market share and is expected to grow at a CAGR of 8% during the forecast period. Modern weapons use GPS for target location and guidance, particularly the precision-guided munition system. No matter the nation, the defense industry uses GPS to gain an advantage during combat and covert operations. For instance, GPS is installed in U.S. cruise missiles to hit the target at a greater distance. Additionally, the nation has created many glide bombs that reach targets 1,000 miles away and use a GPS seeker rather than a laser for precise guidance.

Furthermore, it is anticipated that significant GPS use in precision-guided weapons such as missiles, rockets, and uncrewed aerial vehicles will increase growth prospects for the technology over the forecast period. Many nations are increasing their defense spending to modernize their current defense infrastructure due to rising GPS modernization initiatives by various government organizations, including the Department of Defense (DOD), and the need for information procurement due to increased global terrorism. Along with using GPS in weapons, this market is expanding due to rising investments in creating cutting-edge wearable technologies, such as smartwatches with GPS.

The weapon system's seeker detects the reflected light from a laser designator that brightens the target with energy in the semi-active laser guidance technology. The laser energy that the seeker senses direct the projectile's trajectory in the direction of the source. Laser-guided technology has been preferred in the four different air-to-ground guidance mechanisms used by the army, marine corps, navy, and air force of the United States.

Recent Developments

• October 2022- Lockheed Martin has a contract to provide three Orion spacecraft for NASA's Artemis VI-VIII missions as part of the ongoing supply of exploration vehicles for the Artemis program. These missions will send astronauts into the depths of space and around the Moon.
• October 2022- BAE Systems and PTC Industries signed an agreement to produce titanium castings at PTC Industries' production facility in Lucknow, Uttar Pradesh, India, for the Indian 155mm M777 Ultra-Lightweight Howitzer (ULH).