GUEST BLOG: The supply-side of the worldwide military markets
BlogAugust 01, 2025
Ray Alderman
VITA Standards Organization
WARFARE EVOLUTION BLOG: Last time, we built the worldwide military market demand-side tree diagram. By now, you should have drawn that diagram and filled-in the roots and branches with the data revealed in the previous articles. This time, we will build the supply-side tree diagram and integrate the two. When we complete this task, don’t try to add-up the supply-side and demand-side numbers and expect them to balance or even come close. The market research reports mentioned count things differently, and they estimate lots of numbers. These people are not certified public accountants.
We’ll start with the roots of the supply-side tree. Obviously, that’s what the defense contractors in the world build and sell to all the countries in the world. There are two primary reports that give us this data: the Defense News Top 100 Defense Contractors list, and the SIPRI (Stockholm International Peace Research Institute) Top 100 Arms Producing and Military Services Companies list. The Defense News list is revealing, even though it’s just a table full of numbers. I find the SIPRI list more informative because you can look at further detail, like regional numbers (North America, Europe, Asia-Pacific, Russia, and the Middle East) with just a click of a button on the screen. There are a few other lists (Top 10, Top 50, Top 75, etc.) that you can peruse, but I find them redundant, inconsequential, and generally annoying.
Now, it’s time to fill-in the branches, and this is where we integrate the two trees. In my last article, the branches of the demand-side tree were the military platforms by volume being bought, revealed to some degree in the referenced market reports: UAVs (unmanned aerial vehicles, GCVs (ground combat vehicles), tanks, fighter planes, helicopters, manned naval vessels, UUV’s (unmanned underwater vehicles), USVs (unmanned surface vessels), satellites, and long range bomber aircraft (that’s 10 branches on the demand-side tree).
The market research reports referenced here are about the primary systems inside all those platforms: radar, EW (electronic warfare), COMM (communications), SIGINT (signals intelligence), PNT (position, navigation, and timing) systems, and sonar. Here’s the problem: the market research report overviews don’t reveal the number of these electronic systems going into each of the platforms, just the market size in dollars and growth rates. You must buy the report to get any detail. So, all the branches on the supply-side tree must connect to the trunk of the demand-side tree, to feed into the 10 platform branches on that tree. This may not be the ideal way to show all this data, but it’s better than a table full of numbers. The branches on the supply-side tree will be organized by market segment growth rates instead of market size.
To read more Warfare Evolution Blogs by Ray Alderman, click here.
Let’s start with the fastest growing branch, going from the supply-side tree to the trunk of the demand-side tree. According to The Business Research Company (a market research company), the worldwide market for military electronics was $231.84 billion in 2024 growing to $305.52 billion in 2029, a CAGR (compound annual growth rate) of 5.6%. Apparently, this report counts all electronics going into the world’s militaries.
The next branch on the supply-side tree is radar. According to Fortune Business Insights, the worldwide market for military radar systems in 2023 was $35.58 billion, growing to $211.12 billion by 2032 a CAGR of 20.96%. Radar will be the largest electronic segment when you consider Golden Dome (the planned U.S. air defense system), anti-missile systems, and all the anti-drone defense systems being designed and bought.
The third branch is EW systems. According to Fortune Business Insights, the worldwide EW market was $18.32 billion in 2024, growing to $36.67 billion in 2032, a CAGR of 9.1%. We’re seeing a lot of activity in anti-drone systems, based on the observations in the Israel-Iran war and the Russia-Ukraine war. Those systems will contribute to both radar and EW systems demand.
Next is the military communications market branch. Fortune Business Insights says that the worldwide market for military communications systems was $34.74 billion in 2024, growing to $60.40 billion by 2032, a CAGR of 7.2%. Many military platforms will use SATCOM links (satellite communications), and there are big changes coming to the market for satellites.
The following branch, according to ResearchandMarkets, is the worldwide market for SIGINT systems. It was $16.8 billion in 2024, growing to $28.1 billion by 2034, a CAGR of 5.4%. As we have seen, in the wars in the Middle East and Ukraine, SIGINT is being used heavily for targeting enemy commanders and their command posts, and their air defense systems.
The next branch is PNT systems. According to Mordor Research, the worldwide market for military position and navigation systems is $9.75 billion in 2025, growing to $12.66 billion by 2030, a CAGR of 5.37%. A subset of this market is the military GPS receiver electronics. MarketsandMarkets says that market was $3.4 billion in 2024 growing to $5.2 billion by 2029, a CAGR of 8.8%. Smart weapons, drones, aircraft, and ships need precise PNT data to be effective.
For our last branch, we have sonar. Spherical Insights says the market for military sonar systems was $3.5 billion in 2023 growing to $5.7 billion by 2033, a CAGR of 5.0%. Building nuclear submarines in the U.S. takes many years: two new Virginia-class attack submarines will be ready in five more years. Europe is building diesel-powered subs, and they can be built in two years or a bit more. The time to build surface warships is also long. I see Europe as a bigger market for sonar systems.
I just touched on the primary markets for military electronic systems in this paper: radar, EW, COMM, SIGINT, PNT, and sonar. Those are the biggest segments I see, and those can be broken down into more focused segments. Here’s an example: Global Market Insights says that the market for military command and control systems was $36.7 billion in 2024, growing to $69.5 billion by 2035, a CAGR of 6.7%. I suspect this cross section of the market includes mission computers and a lot of COMM equipment together.
Here’s another example, using indirect market data to validate other market data. Verified Market Research says that the worldwide market for tires for military vehicles was $1.2 billion in 2024, growing to $1.9 billion by 2033, a CAGR of 5.5%. Many GCVs being built are wheeled, not tracked. Grand View Research says that the worldwide market for GCVs (ground combat vehicles) was $32.41 billion in 2024, growing to $44.5 billion by 2030, a CAGR of 5.4%. The growth rates for both segments match up, and the ratio of tire costs to total vehicle costs (1.2/32.41= 4%, 1.9/44.5= 4%) seem to make sense.
Here’s something that might add to your perspective of the military markets, called the MMR (magic military ratio), that I discovered while tinkering around with the numbers. I looked-up the cost of the major electronic systems on an AEGIS destroyer (radar, sonar, EW, COMM, PNT, fire control, mission computers, etc.), added them up, and divided that by the total cost of the destroyer. It came out to about 40% (lots of room on a ship for electronic systems).
I took the costs of the electronic systems inside an Abrams tank that I could find (COMM, active-protection radar, mission computers, PNT, engine controllers, laser targeting system, etc.), estimated the cost of some, added those up, and divided that by the total cost of the Abrams tank. That came out to about 35% (not much room in a tank for many electronic systems). That makes the average about 37%. If you know the total cost of a platform, multiply that by 37%, and it should give you an estimate of the electronics inside. Take the new B-21 bomber for example: it costs about $550 million each in low volume. If my MMR is accurate, there’s about $203 million worth of electronics inside the plane. That makes sense: most of those systems are new designs, and Northrop has only built six B-21s so far.
Hopefully, this series of 10 articles has assuaged the anguish of your disorientation, enhanced your enjoyment of the military markets, and transformed your confusion into visionary enlightenment through the masterful integration of the demand-side and supply-side tree diagrams. There are many market research reports about the military market segments on the web. All we've done here is sketch a methodology for organizing them. Your demand-side and supply-side tree diagrams could have 20 or 30 branches, depending on how deep you want to dive into analyzing the military market. Look at the market-size-in-dollars and the growth rates of the segments relative to each other, not as absolute numbers.
However, we’re not done yet. The latest U.S. military budgets, and the recent NATO spending agreements, are changing the priorities of the military platforms and systems to be bought in the future. The market research companies have not caught up with these new realities yet, so the numbers in the research reports we have referenced are now in doubt. We’ll untangle some of those knots next time. Meanwhile, go build your new supply-side tree, connect it to your demand-side tree, and marvel at the clarity of your newfound understanding.
