Date: 05/05/2010

Strategy Analytics: AEGIS upgrades to drive advanced electronics market demand

The Strategy Analytics Advanced Defense Systems (ADS) service report, "Electronic Component Demand Scenarios for the Aegis Combat System," predicts that the annual market for electronics will grow at an overall CAAGR (compound annual average growth rate) of 5 percent through 2020, with upgrades to existing platforms becoming an increasingly prevalent portion of this market.

The release states, the Aegis Combat System's increasingly sophisticated mission, which now includes Ballistic Missile Defense and in-shore protection, is creating opportunities for advanced electronic components. The annual market for electronics will show steady growth, increasing from $590 million in 2009 to $677 million in 2020. The market itself is largely US-centric with a handful of companies involved, including Lockheed Martin, Northrop Grumman and Raytheon.

"Integrating all of the Aegis Combat System functions together creates opportunities for a wide variety of electronics and technologies," noted Asif Anwar at Strategy Analytics. "Increasingly sophisticated mission requirements are driving innovation, which is leading to increased use of phased array radars, commercial off-the-shelf (COTS) components and computing power."

Mr. Anwar concluded, "At the same time, recent program decisions have added some upheaval to the market, making electronics upgrades in existing ships a very important part of the overall Aegis Combat System market opportunity."