The close-in weapon systems market is expected to grow from USD 5.35 billion in 2020 to USD 10.51 billion in 2026, witnessing a CAGR of 10.81% during the forecast period (2021-2026).
Since the demand for CIWS systems is a direct proponent of the ongoing procurement and upgrade of the fielded armada of terrestrial and naval platforms, it is significantly affected by the sanctioned annual defense budget of the nations. Hence, the COVID-19 pandemic has had a moderate impact on the market in focus. The ongoing global economic slowdown is anticipated to result in a subsequent decline in defense spending on a short-term basis. However, due to existing regulations and controls, major US-based manufacturers are less likely to bear the impact of the wider supply chain disruption caused by the pandemic. However, suppliers and MRO service providers located in Asia-Pacific and South America are more vulnerable to supply chain disruptions and are envisioned to face operational constraints and high financial risk exposure due to supply chain bottlenecks.
The close-in weapon systems market is anticipated to be driven by a consistent increase in the global military fleet, internal and external security threats, technological innovations, aging global military fleet, joint ventures, and strategic alliances formed to address the specific requirements of the modernization initiatives undertaken by the global armed forces. Moreover, the growing instances of asymmetric warfare and the emphasis on developing advanced warfare systems are the main drivers for the market. However, the design and operational issues regarding the use of automated weaponry such as remote weapon stations (RWS) and CIWS may challenge the industry in the short term. Additionally, the market is marred by frequent installation and operational challenges associated with autonomous weapon systems, such as the inherent vulnerability to magnetic fields, radio signals, and other electronic attacks.
Key Market Trends
Growing Emphasis on Developing Advanced Combat Systems
During the last decade, many countries have developed and fielded their autonomous weapon systems to bolster their military capabilities and to strengthen their troops in several conflicts around the world. The proliferation of innovations in the field of sensor technologies, weapon firing systems, and other auxiliary systems are aimed at enhancing the accuracy and performance capabilities of the current generation of CIWS. The emphasis on increasing the autonomy of the weapon systems has given rise to unmanned weapon technologies such as RWS and CIWS that can effectively neutralize a target without human intervention. The new variants of CIWS feature advanced optronic that renders them exceptionally suitable for urban warfare and thus reduce the casualties during a war. The increasing induction of armored vehicles equipped with RWS and CIWS systems for protection against incoming projectiles is driving the demand for such systems. Furthermore, the emergence of sophisticated missiles is driving the defense manufacturers to develop new variants of CIWS to counter the incoming hostile projectile before impact effectively.
North America to Dominate the Market During the Forecast Period
The United States and Canada are avid users of CIWS in North America currently focused on upgrading their existing vehicle fleet and their corresponding capabilities. The US FY2021 defense budget prioritizes modernization of military systems to compete with China and Russia on the global front while emphasizing day-to-day operations for ongoing conflicts, crisis response, and allied engagement. As per the 2021 defense budget provisions, the defense contractors are anticipated to pursue the production of existing CIWS while conducting extensive R&D for future systems. In September 2018, Raytheon Technologies Corporation was awarded a USD 482 million contract, spanning over six years, to update the MK 15 CIWS deployed by the US Army and the US Navy. Additionally, in January 2018, Raytheon received a USD 570 million contract from the Canadian government for the maintenance and upgrade of 21 units of Phalanx Close-in Weapon Systems installed on the naval fleet. The provisions of the contract include engineering services, project management, support, and disposal services, as well as the procurement of spares and test equipment until 2037. Moreover, in August 2019, the US Navy awarded a USD 200 million contract to Raytheon Technologies Corporation for MK 15 Close-In Weapon System (CIWS) upgrades, conversions, overhauls, and associated hardware for the U.S and international customers. Numerous procurement and upgrade programs are anticipated to be initiated in the upcoming period and are envisioned to enhance the business prospects of the North American segment of the market in focus during the forecast period.
The close-in weapon systems market is consolidated with major players such as Raytheon Technologies Corporation, Leonardo SpA, BAE Systems plc, Rheinmetall AG, ASELSAN AS, and Thales Group, dominating the market share. The growing demand for CIWS is fostering R&D for new optronics and sensor subsystems. Meanwhile, companies are trying to expand their geographical presence in emerging markets such as Asia-Pacific. On this note, in August 2019, ASELSAN AS’s Gokdeniz CIWS was delivered to an undisclosed country in the region. The Gokdeniz CIWS is effective against helicopters, fighters, unmanned aerial systems (UAS), and asymmetric surface naval threats. Also, in January 2018, the Indian Ministry of Defence (MoD) issued a tender worth more than USD 1.5 billion to acquire 61 units of CIWS from domestic manufacturers under the Make in India program. Under the program, the Indian companies will have to collaborate with foreign manufacturers to build the weapon systems under the 'buy and make' clause of the defense acquisition procedure.
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1.2 Scope of the Study
4.2 Market Drivers
4.3 Market Restraints
4.4 Porter's Five Forces Analysis
4.4.1 Bargaining Power of Buyers/Consumers
4.4.2 Bargaining Power of Suppliers
4.4.3 Threat of New Entrants
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry
5.3.1 North America
5.3.4 Rest of the World
6.2 Company Profiles
6.2.1 ASELSAN AS
6.2.2 BAE Systems PLC
6.2.3 General Dynamics Corporation
6.2.4 Leonardo SpA
6.2.5 Rafael Advanced Defense Systems Ltd
6.2.6 Raytheon Technologies Corporation
6.2.7 Rheinmetall AG
6.2.8 Thales Group
A selection of companies mentioned in this report includes:
- ASELSAN AS
- BAE Systems PLC
- General Dynamics Corporation
- Leonardo SpA
- Rafael Advanced Defense Systems Ltd
- Raytheon Technologies Corporation
- Rheinmetall AG
- Thales Group