The Impact of the Top 3 Strategic Imperatives on the Global Naval Unmanned Systems Industry

Geopolitical Chaos

Why

• The naval domain has historically been a key contested environment in warfare.
• Today, the protection of maritime resources is a high priority for most nations, increasing the demand for cutting-edge naval technologies, such as manned-unmanned teaming.

Frost Perspective

• Nations will continue to forge alliances, such as AUKUS, to enhance their maritime capabilities and integrate unmanned vessels into their arsenals.
• This will be especially relevant in areas, such as the South China Sea and the Arctic, that contain untapped resources in high demand for neighboring countries.

Disruptive Technologies

Why

• Artificial intelligence (AI) has become a hot topic in the past two years because of the rise of its generative applications.
• The term refers to the use of technologies to build systems that can mimic cognitive human behavior, which has sparked the interest of military commanders.

Frost Perspective

• In the case of naval unmanned systems, AI can be used for autonomous decision making, training, simulation, data processing, and target identification, among others.

• Companies are striving to meet the technology’s skyrocketing demand in the defense industry.

Innovative Business Models

Why

• Small companies, such as Prism Maritime and ICI Services, have disrupted the market by ensuring rapid technology deployment.
• Traditional defense companies, however, such as Northrop Grumman and Rafael, remain relevant participants.

Frost Perspective

• Some companies, in addition to the military realm, participate in the commercial unmanned systems market, and their ability to scale large batches of products quickly will be of great importance in the future.
• Examples include Robosys and Nordic Unmanned.

Scope of Analysis

• The market is segmented by the type of unmanned vehicles used in the maritime domain.
• Contract data was obtained from official defense department websites and news outlets, in cases where defense departments do not disclose contract information.
• The study does not include classified spending information, making a portion of the total naval unmanned systems market spending information unreportable.

Segmentation

Global Naval Unmanned Systems Market

Unmanned Surface Vehicles (USVs)

• USVs are unmanned vessels operating on the water’s surface for intelligence, surveillance, and reconnaissance (ISR), ocean data collection, electronic warfare, and potentially as weapon platforms.
• Examples include the US Navy’s Sea Hunter and the Turkish Naval Force’s ULAQ.

Unmanned Underwater Vehicles (UUVs)

• UUVs are unmanned vessels capable of operating underwater and are used for mine countermeasures, anti-submarine warfare, intelligence gathering, and potentially as weapon platforms.

• Examples include the Chinese People’s Liberation Army’s (PLA) HSU-001 and the Royal Australian Navy’s (RAN) Double Eagle Mk II.

Unmanned Aerial Vehicles (UAVs)

• UAVs, traditionally from the air domain, are unmanned vehicles that can fly. In the naval domain, they are used for surveillance and reconnaissance, tracking, logistics, patrol, rescue, and potentially as weapon platforms.
• Examples include the US Navy’s Triton and the British Royal Marines’ T-150.

Growth Drivers

• Defense departments worldwide are looking for cost-effective solutions that demand fewer personnel to alleviate budget constraints. In this sense, unmanned naval systems are an attractive alternative to traditional military vessels because of their autonomous capabilities, often powered by AI.
• The global conflict landscape forces defense departments to invest in the development of unmanned naval systems to gain an advantage against their adversaries. This is especially evident in the technological race between the United States and China, where both countries aim to surpass the other’s arsenal and protect their maritime resources.
• Recent advances in manufacturing, such as 3D printing, have contributed to lower production costs and decreased barriers of entry for new market participants. This, in turn, leads to lower commercialization costs, making the unmanned naval systems market more competitive and appealing to potential customers.

Growth Restraints

• The market is at a nascent stage; therefore, companies, especially small businesses, need funding to carry out the proper R&D process to ensure top-quality products. Failure to obtain government or private equity funds can prevent prototypes from scaling to full production. In US DoD vocabulary, this is called ‘the valley of death.’
• The market is relatively new and thus has constraints, in terms of standardizing platform design, data formats, and other attributes. This halts the progress toward interoperability and a modular open-systems approach, making these new systems harder to integrate with legacy platforms and discouraging defense departments from procuring them.
• Customers often have high expectations for a variety of features, including diversity in payloads, long-range communication capabilities, extended power, and low-frequency emissions. New market participants may struggle to meet all these requirements and refrain from participating altogether.

Companies to Watch

• Charles River Analytics (CRA)
• Alpha Unmanned Systems
• Robosys
• Tekever