27 January 2021
Legacy UAV systems will remain in service, in demand, and funded for sensor upgrades, while new UAVs and new UAV sensors – from expensive, stealthy A2/AD-capable systems to much more capable and expensive sensors for thousands of small tactical/mini/nano-UAVs – will result in continuing EO/IR market growth, at least in the near-term. And when retirements do occur – the USAF decided in 2015 that it would mothball its entire Predator fleet, and the final flight occurred in March 2018 – they will often be accompanied by funding for major sensor upgrades to the remaining fleet, such as the $1 billion comprehensive sensor ball retrofit for as many as 400 USAF Reapers that have continued in service.
UCAVs (Unmanned Combat Aerial Vehicles) and mini/nano-UAVs will be the fastest-growing market segments as small UAV EO/IR sensors become nearly equivalent to (and as expensive as) today’s endurance UAV sensors, and larger UCAV systems become manned-aircraft equivalents – with JSF capability and expense – leading to substantial overall increases in our speculative out-years forecasts for these markets.
Teal Group forecasts steady near-term growth in the UAV EO/IR market, rising from $1.8 billion in FY20 to $2.3 billion in FY24, but then leveling off at about $2.4 billion per year for the rest of the decade. Note that FY16 included the first chunk of large continuing funding for transferring manned U-2 ISR aircraft sensors to Global Hawk, as well as the first production sensors for the new South Korean and USAF Global Hawks – the overall UAV EO/IR market was only worth about $970 million in FY15. The new growth has now already been underway for a few years.
Two years ago, we also warned that the current generation of legacy UAV programs will be supplemented by more and more classified future programs in all mission areas – not just the USAF RQ-170 and (possible) RQ-180 – leading to an increasing percentage of future funding hidden in the Pentagon’s massive classified budget. We discuss and forecast more of these programs every year as UAV ISR “goes black,” and it is vitally important to forecast these programs, even speculatively, as they make up more and more of the market available to developers and manufacturers.