In contrast to the positive swing observed at the end of the second quarter, revenue growth came to a standstill in the third quarter of 2012, with a snapshot of company results showing revenues largely flat quarter-to-quarter. For most companies, there was a common thread with revenue growth in one or two parts of a company’s business activity being counteracted by declines at other business units.

Despite the challenging quarter, early indicators suggest that the defense industry will show revenue growth in 2012 and profitability will also continue to be maintained. This is despite the uncertainties surrounding sequestration and the “fiscal cliff” in the US as well as budget uncertainties in European and other international markets.

Moving into 2013, maintaining profitability will be the challenge for the industry especially if revenue growth starts to stall. The US elections have not so far resulted in a definitive political solution from the leadership on sequestration or avoiding the “fiscal cliff”. There is however some positive rhetoric coming through and in our opinion it is highly unlikely that sequestration will actually be implemented in January 2013. The more likely scenario will see legislation coming into play that offsets sequestration possibly through to the end of 2013 (calendar-year) while the two political parties continue to engage in tit-for-tat negotiations through the end of the calendar year on the issues surrounding the “fiscal cliff” and sequestration. It does appear that the US defense budget is close to approval and the industry will end up operating within essentially a “continuing resolution” as far as sequestration is concerned.

For 2013, the defense industry will need to look towards developing and offering solutions based on next generation technologies and competencies in areas such as cyber.

RF technologies such as GaN, for example, offer a clear path towards upgrading radar, electronic warfare and communications systems capabilities. The use of these technologies in AESA radar for example underpinned a number of radar milestones in November including Raytheon meeting critical performance requirements to advance ongoing system integration on the Cobra Judy Replacement program.  Northrop Grumman completed its technology demonstration contract for the US Navy's Air and Missile Defense Radar (AMDR).

There is also continued momentum behind Directed Energy Weapons using either laser or RF/microwave technologies continue to be explored. MBDA Germany completed a further major step towards a laser weapon system with a high-energy laser demonstrator that demonstrated a complete deployment sequence in countering rockets, artillery and mortar shells (C-RAM). Using 40 kW of laser power, the laser demonstrator successfully acted on airborne targets at a range of over 2 km. A similar effort from Lockheed Martin Space Systems is the Area Defense Anti-Munitions (ADAM) system which demonstrated a portable, ground-based military laser system in a series of tests against representative airborne targets.

The challenges of maintaining integrity in the network and protecting the users, platforms, systems and devices operating in a net-centric environment will provide a fresh avenue of opportunity for those companies that can offer a comprehensive suite of cyber solutions in 2013. This will provide a driver for companies to acquire capabilities to bolster their cybersecurity offerings.

There were several announcements from RF component suppliers related to GaN technology including RFMD introducing a series of high-power GaN broadband power transistors (BPTs) and highly linear GaN RF unmatched power transistors. Meanwhile, TriQuint's 0.25-micron GaN on SiC TQGaN25 process demonstrated a MTTF of greater than 10 m hours at 200C. As with GaAs, Northrop Grumman has also been at the forefront of developing GaN technologies through DARPA and other military research programs maintaining an emphasis on the defense sector. The company is now starting to showcase its GaN technology for commercial availability (see Northrop Grumman Breaks from Pack with GaN Products Targeting Higher Frequency Markets) with the introduction of a series of GaN MMIC products. Offering higher frequency capabilities through to Q-band, Northrop Grumman is breaking away from a pack of competitors that have largely focused on products at the lower end of the frequency spectrum.  

Clients of the ADS service can read the full report Defense Electronics Industry Review: November 2012 which details significant defense industry news, including product announcements, milestones, contract activity and defense industry financial performance.

For 2013, the defense industry will need to look towards developing and offering solutions based on next generation technologies and competencies in areas such as cyber. Radar, communications and EW systems capabilities will increasingly be underpinned by advanced component technologies and these technologies will also form the basis for weapon systems. The challenges of maintaining integrity in the network and protecting the users, platforms, systems and devices operating in a net-centric environment will continue to provide a fresh avenue of opportunity.

Don’t miss our regular column in Microwave Journal’s Military Microwaves.

Asif

Phased array technology featured heavily in radar contracts and other activities during September. Platforms ranged from large ground-based early warning radar (EWR) systems to scaled-down AESAs for incorporation into unmanned aerial vehicles (UAVs).

Active Electronically Scanned Array (AESA) technology dominated a host of radar contract announcements during September including news of Northrop Grumman completing tests of its Air and Missile Defense Radar (AMDR) S-band radar system as well as demonstrating technologies for the Three-Dimensional Expeditionary Long-Range Radar (3DELRR) program. Raytheon was also actively involved in the supply of AESA-based systems, receiving a second contract for low-rate initial production (LRIP) of AN/APG-82(V)1 AESA radar systems for the U.S. Air Force F-15E Radar Modernization Program.

In other areas, Harris, L-3 Communications and Selex Elsag were supplying communications systems, Boeing received further contracts for Laser JDAM kits and ITT Exelis announced another successful demonstration of its Advanced Defensive Electronic Warfare System (AIDEWS). The use of laser technology was also being demonstrated. MBDA Germany achieved a power of 40 kW using its high-energy laser demonstrator during a laser firing campaign while ITT Exelis is partnering with Innovative Technical Solutions to develop a laser communications system for the US Navy and Marine Corps.

Business news for the month was dominated by the discussions between Europe's largest defense corporations, BAE Systems and EADS. The deal has been shelved primarily as a result of the respective UK, France and German governments not being able to agree on terms. BAE Systems-EADS Merger Dead in the Water provides some more thoughts on this news.

Clients of the ADS service can read the full report Defense Electronics Industry Review: September 2012 which details significant defense industry news, including product announcements, milestones, contract activity and defense industry financial performance.

Asif

Despite the ongoing uncertainty with defense expenditure facing challenges and the threat of sequestration hanging over US companies there was positive news on the financial front as companies finished releasing results for the second quarter of the calendar year. Taking a snapshot of financial results and looking at quarterly revenue growth over the second and first quarters shows a turnaround with companies growing revenue as opposed to the quarter-to-quarter revenue declines observed after the first quarter of 2012.

There was also plenty of activity in August including new product launches, technology demonstrations and contracts as well as business acquisitions.

Amongst the business deals concluded in August, Mercury Computer Systems completed its acquisition of Micronetics, allowing the company to continue solidifying a portfolio of offerings that will now include RF capabilities. Meanwhile, BAE Systems signed a MoU with MASS to work on EW systems for the export market. The partnership is designed to offer customers electronic warfare training and data management, operational analysis, countermeasure development, mission data validation and mission evaluation.

There were also a number of announcements in the area of UAVs, with for example, an emphasis on developing secure communications. Northrop Grumman awarded Cubic Communications a contract to produce a new multiband digital data link system for the MQ-8C Fire Scout unmanned helicopter which will feature the ability to transmit Ku- and C-band transmissions at the same time. Expanding the role of UAVs with the addition of weapons is also being actively pursued and Raytheon completed a successful warhead and guidance system test of its Pyros small tactical munition to validate the weapon's semi-active laser and GPS guidance modes.

In July one of the notable events was NETMA issuing a RfP to Eurofighter GmbH for the development of an AESA Radar (E-scan). Officials said the target is to have a contract by the middle of next year and to have an E-Scan entering into service by 2015. The contract would mean development of the radar would come early next year with Eurofighter and Euroradar, the Selex Galileo-led consortium supplying radars for the Typhoon. The other European fighter, the Saab Gripen NG aircraft is now flying with a SELEX Galileo Raven ES-05 AESA fire control radar installed.

In August, there was considerable activity for naval radar platforms that included Lockheed Martin submitting its final proposal to the US Navy to design, build, integrate and test the new Air and Missile Defense Radar (AMDR) S-band radar and radar suite controller for the future DDG-51 Flight III class destroyer.

At the component level, Northrop Grumman demonstrated an 850 GHz integrated receiver under Phase 2 of the DARPA Terahertz Electronics program, setting a new performance record. Under Phase 1, the company had already developed a Terahertz Monolithic Integrated Circuit that operated at 670 GHz in 2010. In addition to demonstrating low-noise integrated receivers, the company also developed and tested LNAs and PAs. Meanwhile, M/A-COM introduced a 40W GaN-on-SiC transistor suitable for S-band military radar. Perhaps more importantly, M/A-COM was suggesting that the MAGX-002735-040L00 will provide an MTTF of 600 years or better based on HTOL RF accelerated life testing.

In conclusion, the summer period was arguably quite upbeat for the defense industry with financials looking positive and plenty of activity in terms of new product launches, technology demonstrations, contracts as well as mergers and acquisitions. Whether this momentum can be maintained as the year draws to a close will be dependent on how well companies are able or perhaps in some cases allowed to adapt to a changing environment and proactively seek out opportunities away from their traditional territories.

Clients of the ADS service can read the full reports:

Defense Electronics Industry Review: July 2012

Defense Electronics Industry Review: August 2012

Also, don’t miss our regular column in Microwave Journal’s Military Microwaves.

See Defence iQ for more analysis on the defense industry, related news and events.

Asif

Military applications will continue to grow and drive fundamental development of semiconductor technologies such as gallium nitride (GaN) and this was highlighted with product announcements during IMS 2012 reviewed in the Strategy Analytics Advanced Defense Systems (ADS) service report, “Defense Electronics Industry Review: June 2012.” Additionally, the report details significant defense industry news, including product announcements, milestones, contract activity and defense industry financial performance for the month of June.

Strategy Analytics’ breakfast session held in conjunction with Microwave Journal during IMS 2012 included participation from Cree, Nitronex, NXP, RFMD, TriQuint and UMS with the presentations serving as a platform to confirm the applicability of GaN to addressing communications, electronic warfare, and radar applications. The panelist presentations confirmed applicability of GaN to addressing EW, radar and communications applications, by highlighting products with some combination of high power, high efficiency and wide bandwidth performance. During the conference itself, there were also a number of product announcements showcasing GaN capabilities including Toshiba’s new X-band GaN hybrid IC (HIC) targeted at TRMs (transmit-receive modules) used in active electronically scanned array (AESA) and passive electronically scanned array (PESA) radar applications.

Eurosatory 2012 in Paris was also in June allowing defense companies to showcase new products and capabilities with a focus on the land and air domains. Elbit Systems Ltd announced the launch of the VWS radar, a new, continuous wave (CW) radar, specifically designed for Active Protection Systems (APS) to provides soft/hard protection for light or heavy armored vehicles. On the EW front, Netline launched a new, extremely small, lightweight, accurate jammers, such as the C-Guard HHJ and the PJP - Portable Jammer Pack – based on new exciter technology as well as using RF capabilities provided by semiconductor technologies such as GaN.

In communications systems, ITT Exelis upgraded its hand-held SpearNet radio with enhancements that further extend its capabilities with an emphasis on providing cellular-like mobility coupled with increased bandwidth throughputs to enable voice, video and data communications. Harris introduced the Falcon III RF-7800H wideband manpack, reportedly the world's smallest, lightest and fastest wideband HF radio as well as the next generation of the combat-proven Falcon III® RF-7800W High-Capacity Line-of-Sight radio. The company has also introduced a handheld variant – the RF-7800M – designed to connect dismounted warfighters to emerging wideband tactical networks.

Other system level activity during June also included systems that employ semiconductor technologies. Boeing and Raytheon received contracts related to AN/APG-79 AESA radar upgrades, while Northrop Grumman demonstrated the capabilities of the company's AN/AAQ-37 distributed aperture system (DAS) and AN/APG-81 AESA radar, both featured on the F-35.

All of these developments will continue to drive demand for RF technologies such as GaN. As these technologies mature, the boundaries around performance and applicability are also crystallising and over the course of IMS 2012 and more recently at Farnborough, it is clear that GaN is no longer seen as a TWT (traveling wave tube) killer by either side. Where there is a need for high power at high frequency without compromising efficiency, then TWT technologies from companies such as e2v Technologies, TMD Technologies, L-3 Communications Electron Technologies will continue to play a key role in defense systems. Indeed, there is potential for these technologies to complement each other especially in the growing trend towards MPMs which utilise mini-TWTs typically in conjunction with a solid-state driver amplifier. As with commercial markets, the military sector will find that these respective technologies as well as other technologies (both existing and emerging) are best utilised in complementary fashion rather than trying to hone in on one flavour of technology alone as the panacea for all future system and platform design.

Clients of the ADS service can read the full report here.

Also, don’t miss this month’s column in the Microwave Journal’s Military Microwaves.

See Defence iQ for more analysis on the defense industry, related news and events.

Asif

Recent defense industry developments center around future platforms with the US Navy looking ahead to the 2030s for a new fighter that could be unmanned. Other areas of focus included next generation systems underpinned by new technologies. The Strategy Analytics Advanced Defense Systems (ADS) service report, “Defense Electronics Industry Review: May 2012,” reviews significant defense industry news, including product announcements, milestones, contract activity and defense industry financial performance.

Even though the JSF has yet to make its operational debut, the US Navy is already looking ahead, issuing a Request for Information (RfI) for a new fighter, which could be manned or unmanned, to replace the Boeing F/A-18E/F Super Hornet and EA-18G Growler in the 2030s. In the short term, unmanned platforms remain in focus also with Northrop Grumman announcing a deal for NATO's Alliance Ground Surveillance (AGS) system which includes five Block 40 Global Hawk UAS. Elbit Systems was also active in Europe with a contract that will see the company supply UAS platforms over the next two years. Also in Europe, BAE Systems has begun testing technology to enable conventional aircraft to fly safely without pilots, including weather-avoidance and emergency landing systems.

New technologies will underpin these new platforms and the capabilities that they bring. For example, the Block 40 UAS platforms for the AGS program will utilize the Multi-Platform Radar Technology Insertion Program (MP-RTIP) ground surveillance radar sensor which uses active electronically scanned array (AESA) technology based using compound semiconductors like gallium arsenide (GaAs).  In other radar related news, Selex Galileo will begin delivering a new version of its Raven ES-05 AESA radar for integration with Saab's two-seat demonstrator for the next-generation Gripen E/F. Progress is also being made on the Euroradar Captor-E AESA for Eurofighter Typhoon where Cassidian is acting as design authority.

Other examples of semiconductor technologies underpinning the next generation of systems include the Next Generation Jammer (NGJ) electronic warfare program, which is providing opportunities for companies such as ITT Exelis. It will utilize AESA technology based around gallium nitride (GaN) semiconductors. Cassidian is also using GaN technology for the electronic components that will be used for the German Armed Forces' new software-defined radio communications system (KommSysBw).

On the research front, TriQuint has been selected by DARPA to lead a development program focused on ultra-fast GaN switch technology for the Microscale Power Conversion (MPC) program. TriQuint is teamed with Rockwell Collins, the University of Colorado at Boulder and Northrop Grumman to create a new generation of RF power amplifiers that use contour modulation for very high efficiency performance that exceeds the capabilities of devices currently available.

GaN continues to play a large part in future defense systems and is also gaining traction in the commercial world. Strategy Analytics explored this technology in detail last week during IMS 2012 in Montreal, Canada. Our special panel session, “Where are the emerging RF market opportunities for GaN?” attracted over 130 participants and provided a great overview of where this technology is going. Thanks to Microwave Journal for working with Strategy Analytics to set up the event and a special thank you to Cree, Nitronex, NXP, RFMD, TriQuint and UMS and Nitronex for presenting such great insightful content.

Finally, laser weapons appeared to be once again in vogue. Northrop Grumman test fired the first product in its next-generation FIRESTRIKE™ family of high-energy, solid-state lasers demonstrating that the laser could burn through the skin and critical components of a target drone. Meanwhile, the Office of Naval Research (ONR) is looking to develop a solid-state laser weapon prototype for multi-mission capabilities aboard a ship.

Clients of the ADS service can read the full report here.

Also, don’t miss this month’s column in the Microwave Journal’s Military Microwaves.

Finally, I’ll be attending IQPC’s Military Satellites 2012 conference this week including a site visit to the headquarters of Surrey Satellite Technology to learn about micro and nano-satellite development from a leader in the global satellite market.

See Defence iQ for more analysis on the defense industry, related news and events.

Asif

Spending on land/ground-based EW (electronic warfare) platforms and systems will see a sharp decline over the next two years as troop withdrawals from Iraq (completed) and Afghanistan obviate demand. The Strategy Analytics Advanced Defense Systems (ADS) service report, “Technology Trends for Land-based Electronic Warfare Systems,” forecasts global spending on ground/land-based EW platforms and systems will drop by an average 27% through 2014 as expenditure that has typically been centered upon these theatres draws to a close.

However, the withdrawal from these theatres will not change the general trends towards asymmetric warfare and unfortunately, the use of IEDs (improvised explosive devices) and RCIEDs (radio-controlled improvised explosive devices) will continue to proliferate. Nations will look to leverage the experience gained to facilitate troops in counteracting the threats of IEDs and RCIEDs in similar situations moving forwards.

Key to developing future EW system capabilities will be an evolutionary approach. The emphasis will be on flexibility, power, modularity, and this is influencing the design of systems as well as the enabling technologies used.

As the signal environment continues to become more complex and congested, RF-based systems, systems will need to be able to look at the complete frequency range. This will require higher performing FPGAs, analog-to-digital converters and wider use of GaN-based RF front-ends to facilitate the development of systems that provide wide-band multi-bit real-time direct RF sampling and processing.

Demand for ground/land-based EW systems will re-emerge from 2015 onwards with global expenditure forecast to exceed $1 billion in 2022.

Clients of the ADS service can read the full report here.

Also, don’t miss my monthly column in the Microwave Journal’s Military Microwaves.

See Defence iQ for more analysis on the defense industry, related news and event.

Asif