Military & Defense Semiconductor Market - By Mounting Technology (Surface Mount Technology, Through Hole Technology [THT] Mounting), By Application (Communications, Weapons, Vehicles, Soldiers), Forecast 2024 - 2032

Military & Defense Semiconductor Market Size

Military & Defense Semiconductor Market was valued at over USD 25 Billion in 2023 and is anticipated to grow at a CAGR of over 8% between 2024 & 2032. Government investments in the military sector are driving growth in the defense semiconductor market by fostering technological advancements. The increased defense budgets enable research and development, resulting in the use of advanced semiconductor technologies for communication, surveillance, and weapon systems. The need for cutting-edge semiconductor components, such as microprocessors and sensors, rises as governments enhance their defense capabilities. This investment-driven technological evolution boosts the industry expansion.
 

For instance, in May 2022, the Government of Netherlands approved an additional USD 5.3 billion in defense spending on a structural basis, demonstrating a 40% increase in the defense budget over the 2022 budget.
 

Semiconductors in military and defense are electronic components with conductivity between conductors and insulators. These critical devices, such as microprocessors and sensors, play a pivotal role in advanced technologies for communication, surveillance, and weaponry. They are integral to the development of sophisticated electronic systems that enhance the capabilities of military and defense applications.
 

Export constraints and geopolitical tensions constrain the semiconductor business in military & defense due to limits on the cross-border mobility of vital technologies. Governments frequently apply stringent measures to protect key technologies, impeding the seamless flow of semiconductor components. Geopolitical conflicts can exacerbate these limits, disrupting the global supply chain and increasing uncertainties. This reduces the accessibility and availability of critical semiconductors, affecting the development and maintenance of modern military & defense systems.

Military & Defense Semiconductor Market Trends

Increased demand for AI and edge computing in the military necessitates better processing chips. Owing to the growing use of IoT and linked devices in military systems, semiconductors are required for secure communication and data processing. The emphasis on cybersecurity solutions highlights the need for sophisticated semiconductor technologies to protect sensitive military data and communications. This reflects the dynamic context in which technology plays a critical role in boosting military capabilities, connectivity, and security.
 

The increased knowledge of vulnerabilities in military semiconductor manufacturing highlights the importance of supply chain resilience. For vital defense applications, there is a trend toward enhancing resilience and expanding domestic manufacturing capacities. Research and development on quantum computing for military use can have an impact on future semiconductor needs. To assure worldwide compatibility and cooperation in defense technologies, ongoing international collaborations and standards development strive to improve interoperability among military systems, impacting semiconductor design and manufacturing issues.
 

Military & Defense Semiconductor Market Analysis

Based on application, the market is segmented into communications, weapons, vehicles, and soldiers. The communications segment dominated the market in 2023 with a market share of over 25%.
 

• The military is increasingly adopting sophisticated communication systems that require high-performance semiconductors for data processing, encryption, and secure transmission. Semiconductor-enabled communication systems are integral to command-and-control operations, facilitating real-time information exchange and decision-making in military scenarios.
   
• The proliferation of unmanned systems in the military depends on robust communication capabilities, driving the demand for semiconductors that enable reliable and secure communication in Unmanned Aerial Vehicles (UAVs) and ground robots.
   

Based on mounting technology, the market is segmented into surface mount technology and Through Hole Technology (THT) mounting. The surface mount technology segment is anticipated to register a CAGR of over 9% through 2032.
 

• Surface Mount Technology (SMT) enables higher component density on PCBs, allowing for the integration of more functionalities in a smaller space, crucial for military systems with size and weight constraints. SMT contributes to improved electrical performance, signal integrity, and thermal management, enhancing the overall efficiency & reliability of military electronics.
   
• SMT technology has become more cost-effective over time, making it ideal for military applications where cost considerations are important for large-scale production and deployment. Advancements in SMT manufacturing processes have resulted in increased precision and efficiency, supporting the production of high-quality, reliable semiconductor components for military use.
   

North America dominated the global military & defense semiconductor market with a share of over 35% in 2023. The military & defense semiconductor industry in North America is anticipated to expand owing to the increased defense spending, improved technology, and emphasis on modernization. The region's strong R&D infrastructure as well as partnerships between top semiconductor businesses and governments fuels innovation. The need for sophisticated electronics, communication systems, and surveillance technology is further propelling market growth. The strategic focus of North America on defense and national security capabilities is also expected to boost market growth.
 

Military & Defense Semiconductor Market Share

Players operating in the military & defense semiconductor industry focus on implementing different growth strategies to strengthen their offerings and expand their market reach. These strategies involve new product developments & launches, partnerships & collaborations, mergers & acquisitions, and customer retention. These players also heavily invest in research & development to introduce innovative and technologically advanced solutions in the market.
 

Military & Defense Semiconductor Market Companies

Some of the major players operating in the military & defense semiconductor industry are:

• Advanced Micro Devices Inc. (AMD)
• Infineon Technologies AG
• Microchip Technology Inc.
• NXP Semiconductors NV
• ON Semiconductor Corporation
• Texas Instruments Incorporated
   

Military & Defense Semiconductor Industry News

• In March 2023, Accenture Federal Services received a USD 380 Billion contract from the U.S. Customs and Border Protection (CBP) for IT infrastructure operations and modernization. Under this contract, the company will provide comprehensive technology support to several projects in charge of defending the country's borders and facilitating authorized foreign travel & trade.
   
• In May 2022, Teledyne FLIR Defense, an arm of Teledyne Technologies Incorporated, received a USD 14 Billion contract from the U.S. Army to supply Black Hornet 3 Personal Reconnaissance Systems (PRSs). These tiny UAVs improve squad and small unit Intelligence, Surveillance & Reconnaissance (ISR) capabilities.
   

The military & defense semiconductor market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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Market, By Mounting Technology

• Surface Mount Technology
• Through Hole Technology (THT) Mounting

Market, By Application

• Communications
  • Encryption
  • Global Positioning System (GPS)
  • Radar
  • Secure Networks 
• Weapons
  • Electronic Warfare
  • Guidance Systems
  • Targeting Systems
• Vehicles
  • Communication Systems
  • Navigation Systems
  • Sensors
• Soldiers
  • Communication Headsets
  • Night Vision Goggles
  • Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • ANZ
  • Singapore
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• MEA
  • UAE
  • Saudi Arabia
  • South Africa
  • Rest of MEA