31 January 2011

Defense semiconductor market to still grow at 6% through 2015

While trying to save more than $150bn over the next five years, the US Department of Defense will focus on technology that will translate into continued development on radar, EW (electronic warfare), communications and other advanced defense capabilities, according to the Strategy Analytics Advanced Defense Systems (ADS) service report ‘US DOD Budget Cuts will Place Emphasis on Advanced Electronics Capabilities’.

The market research firm predicts that this continued emphasis will translate into an upwards trajectory for defense sector semiconductor market growth over 2010–2015, with a compound annual growth rate (CAGR) of more than 6%.

These efficiency decisions are designed to save the Department of Defense more than $150bn over the next five years, primarily by reducing overhead costs, improving business practices, and culling excess or troubled programs. Most of the resulting savings will be used by the Army, Navy, Marine Corps and Air Force to invest in high-priority programs that strengthen warfare capability.

“Despite defense budget growth dwindling to zero by 2015, there is recognition that the mistakes of the past should not be repeated by making drastic cuts to the overall defense budget,” says Asif Anwar, ADS Service Director. “Progress made by China and Russia will require that the US continue its focus on technology,” he adds.

“Investment in high-priority programs that strengthen fighting capability will translate into continued development on radar, EW, communications and other advanced defense issues,” notes Eric Higham, ADS Service Director North America. “Strategy Analytics believes that this will maintain demand for semiconductors, with a particular emphasis on technologies such as GaAs (gallium arsenide), GaN (gallium nitride) and SiGe (silicon germanium).”

Tags: Defense semiconductor market

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