The global defense electronics obsolescence market was valued at USD 2,530.1 million in 2024. It is expected to grow from USD 2,736.3 million in 2025 to USD 5,005.7 million by 2032, registering a compound annual growth rate (CAGR) of 9.0% during the forecast period.
North America dominated the market in 2024 with a 45.6% share, valued at USD 1.15 billion. In the U.S., the FY2025 defense budget exceeds USD 800 billion, with significant investments in predictive analytics and lifecycle forecasting led by key players such as BAE Systems, Raytheon, and Lockheed Martin. India’s FY2025 defense budget is expected to surpass USD 70 billion, emphasizing indigenization and technology-driven obsolescence management. Meanwhile, Germany, France, and the U.K. are collectively projected to exceed USD 300 billion in defense spending by 2025, supported by the European Defence Fund to advance interoperability and address obsolescence challenges.
Raytheon Technologies Corporation (U.S.)
BAE Systems (U.K.)
L3 Harris Technologies Inc. (U.S.)
Thales Group (France)
Elbit Systems Ltd (Israel)
Lockheed Martin Corporation (U.S.)
Northrop Grumman Corporation (U.S.)
General Dynamics Corporation (U.S.)
Bharat Electronics Ltd (India)
Leonardo SPA (U.S.)
https://www.fortunebusinessinsights.com/defense-electronics-obsolescence-market-112861
The defense electronics obsolescence market is segmented by system, platform, and type. Based on system, the market includes communication systems, navigation systems, flight control systems, electronic warfare systems, and others. Among these, the communication system segment held a significant market share in 2024, largely due to the continuous need for upgrades to maintain secure and interoperable communications across the battlefield.
By platform, the market is categorized into land, naval, and air. The air platform segment is expected to witness robust growth during the forecast period, as airborne systems require frequent technological upgrades to sustain mission effectiveness and respond to emerging threats.
In terms of type, the market is divided into supply chain obsolescence, functional obsolescence, and technical obsolescence. The technical obsolescence segment is anticipated to dominate the market, driven by the rapid pace at which electronic components and technologies become outdated, thereby compelling defense organizations to consistently invest in modernization and system upgrades.
Growing Need for System Upgrades to Drive Market Expansion
The rising reliance on electronics for mission-critical operations across defense platforms is creating a growing demand for timely system upgrades. With national security at stake, military forces cannot afford performance degradation due to obsolete parts, thereby driving growth in the defense electronics obsolescence market.
High Replacement Costs and Complexity to Restrain Market Growth
Despite growing demand, the high cost of replacement, integration challenges, and limited compatibility with legacy platforms are expected to restrain market growth. Additionally, managing global supply chains for defense-grade components remains a major concern.
North America to Hold Largest Market Share
North America led the global defense electronics obsolescence market in 2024, driven by substantial military spending and early adoption of digital warfare solutions by the U.S. Department of Defense. The region’s strong defense industrial base and focus on electronic warfare capabilities continue to support market expansion.
Europe and Asia-Pacific to Witness Substantial Growth
Europe ranks as the second-largest market due to defense modernization programs in the U.K., France, and Germany. Meanwhile, Asia-Pacific is anticipated to witness robust growth due to rising geopolitical tensions and increased military investments in countries like China, India, and Japan.
Leading companies are investing heavily in research and development (R&D) to tackle obsolescence proactively. Collaborations with governments, emphasis on modular system design, and digitization of legacy infrastructure are central to their growth strategies. These players are also actively pursuing contracts and modernization projects to expand their global presence.
December 2024 – A contract worth USD 1.2 billion was awarded for six Next-Generation Missile Vessels (NGMVs). These vessels will enhance naval capabilities with advanced stealth and offensive electronics, emphasizing the urgency of mitigating obsolescence in modern platforms.
December 2024 – The Directorate of Defense Research and Development (DDR&D) under the Israel Ministry of Defense finalized several agreements with Elbit Systems to deliver cutting-edge communication systems to the Israel Defense Forces (IDF). The deal, valued at around USD 130 million, highlights the strategic focus on modernizing defense communication infrastructure.