Defense Electronics Market Report 2026

The defense electronics market size has grown strongly in recent years. It will grow from $244.38 billion in 2025 to $257.58 billion in 2026 at a compound annual growth rate (CAGR) of 5.4%. The growth in the historic period can be attributed to growing adoption of GPS-enabled guidance and geolocation systems strengthening precision mission capabilities, rising deployment of infrared and radio frequency remote controls across defense platforms, increased demand for radiation-hardened electronics to support space and high-radiation missions, expansion of system integration services enabling complex defense electronics architectures, sustained defense modernization programs driving procurement of advanced electronic components.

The defense electronics market size is expected to see strong growth in the next few years. It will grow to $317.67 billion in 2030 at a compound annual growth rate (CAGR) of 5.4%. The growth in the forecast period can be attributed to advancements in AI-enabled defense electronics enhancing autonomous and decision-support functions, rising investment in space-based electronic systems expanding demand for radhard components, increasing focus on resilient and cyber-secure electronics strengthening next-generation defense platforms, growth in multi-domain operations driving integration of interoperable electronic systems, expanding global defense budgets supporting long-term procurement of advanced electronics and associated services. Major trends in the forecast period include expansion of radar and electro-optical systems, growth in simulation and training software adoption, increased integration of gps and geolocation devices, rising demand for maintenance and repair services, advancement in system integration capabilities.

The increasing defense expenditure is expected to propel the growth of the defense electronics market going forward. Defense expenditure, also referred to as military spending or a defense budget, represents the financial resources a government allocates for defense and military-related activities. A portion of this budget is typically dedicated to defense electronics, including equipment such as air defense radars and communication systems. For instance, in October 2025, according to the UK Parliament's House of Commons Library, a UK-based government administration, defense spending outlined in the 2025 Spending Review is projected to reach USD 83.3 billion (£62.2 billion) in 2025/26 and increase to USD 98.2 billion (£73.5 billion) by 2028/29, reflecting an average annual real-terms growth rate of 3.8% over this period. Therefore, the rise in defense expenditure is driving the growth of the defense electronics market.

Major companies operating in the defense electronics market are focusing on developing innovative products such as helmet-integrated artificial intelligence (AI) command systems to enhance battlefield situational awareness and streamline real-time decision-making. Helmet-integrated AI command systems are advanced headgear that embed AI-powered sensors, displays, and communication tools directly into a soldier’s helmet, providing situational awareness, prioritizing threats, reducing equipment load, and enabling faster, more informed battlefield decisions. For example, in October 2025, Anduril Industries, Inc., a U.S.-based defense technology company, launched EagleEye, a suite of AI-powered vision products for soldiers - including helmets, visors, and glasses - that overlay critical battlefield information, such as teammate locations, onto real-world surroundings to improve situational awareness. The system is powered by Anduril’s AI platform, Lattice, and integrates augmented reality components developed in collaboration with Meta Platforms, Qualcomm, OSI, and Gentex, representing a significant advancement in military electronics and tactical augmented reality capabilities. The initiative builds on founder Palmer Luckey’s expertise in virtual and augmented reality, leveraging technology he helped develop at Oculus, now adapted for defense applications.

In February 2023, Lockheed Martin, a defense and aerospace manufacturer based in the U.S., formed a partnership with Northrop Grumman. This collaboration aims to enhance Lockheed Martin's next-generation electronic warfare systems and bolster its capabilities in radar and sensor technologies. The focus of this partnership is on developing integrated solutions to enhance the defense systems of fighter jets, thereby advancing the electronic warfare and communications infrastructure of the U.S. military. Northrop Grumman is a multinational aerospace and defense company in the U.S. and one of the largest manufacturers of weapons and military technology.

Major companies operating in the defense electronics market are Raytheon Technologies Corporation, The Boeing Company, Lockheed Martin Corporation, General Dynamics Corporation, Mitsubishi Electric Corporation, Honeywell International Inc., Northrop Grumman Corporation, BAE Systems plc, Safran S.A., Thales Group, L3Harris Technologies Inc., Leonardo S.p.A., Textron Inc., Rheinmetall Electronics GmbH, Elbit Systems Ltd., Serco Group plc, Indra Sistemas S.A., Saab AB, Airbus Defence & Space GmbH, Rafael Advanced Defense Systems Ltd., Bharat Electronics Limited, Hensoldt AG, LIG Nex1 Co. Ltd., Ultra Electronics Holdings plc, Kratos Defense & Security Solutions Inc., Terma A/S, Tata Advanced Systems, Samsung Techwin Co. Ltd., Data Patterns Ltd., Rockwell Collins Inc.

North America was the largest region in the defense electronics market in 2025. The regions covered in the defense electronics market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

Tariffs impact the defense electronics market by raising costs for imported high-tech components, radar systems, and avionics equipment. Airborne and naval electronics, particularly in North America, Europe, and Asia-Pacific regions, are most affected due to reliance on global supply chains. While tariffs may slow adoption and increase production costs, they also incentivize domestic manufacturing, encourage investment in localized innovation, and strengthen strategic security independence for national defense applications.

The defense electronics services research report is one of a series of new reports that provides defense electronics market statistics, including the defense electronics industry's global market size, regional shares, competitors with an defense electronics market share, detailed defense electronics market segments, market trends and opportunities, and any further data you may need to thrive in the defense electronics industry. This defense electronics market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

Defense electronics encompass electronic systems and components engineered to achieve technological superiority in national defense. These advanced systems are developed with cutting-edge technological sophistication to provide the latest capabilities for a country's security. They find multiple military applications and can be deployed across diverse environments, including space, land, and sea.

The primary components of defense electronics include hardware, software, and services. Hardware constitutes the physical components or machinery of electronic devices, such as integrated circuits (ICs), crucial for the operation of microprocessors and memory units within defense systems. Various types of equipment within defense electronics encompass C4ISR systems, weapon systems, electro-optical and infrared (EO/IR) systems, military simulators, radar systems, sonar systems, avionics, electronic warfare, and other technologies. These systems are deployed across various platforms including airborne, marine, land, and space for defense applications.

The countries covered in the defense electronics market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The defense electronics market includes revenues earned by entities by providing system integration, supply chain management, and maintenance and repair services. The market value includes the value of related goods sold by the service provider or included within the service offering. The defense electronics market also consists of sales of infrared (IR) and radio frequency (RF) remote controls, radiation-hardened (RADHARD) electronics, and GPS-enabled guidance, mapping, & geolocation devices. Values in this market are ‘factory gate’ values, that is, the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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