Global militaries rely on satellites to provide communications, reconnaissance information, and navigation and weather data, plus other services. This need for satellite capabilities has led to large space budgets, especially in the United States. However, military space spending behaviors are beginning to change. Going forward, militaries will be much more disciplined in how they spend money on satellite programs. They will balance the need for advanced and capable systems with the need for more rapid deployment. In addition, satellite needs will be balanced against the need for other equipment, especially cyber defense systems.
Military operations increasingly rely on the transfer of data in order to be effective. For the U.S., that means that even though there are fewer troops stationed abroad than there were a few years ago, demand for satellite capabilities has remained high.
Despite this growing demand for satellite capability, militaries around the world must deal with tight budget environments, especially in Western Europe and the U.S. However, the U.S. will continue to spend more money on satellites than any other country does. Still, many military satellites will be launched by other countries – specifically, a pair of optical satellites will be launched by Poland, three SARah satellites will be launched by Germany, and another IGS-Optical satellite will be launched by Japan.
One of the biggest developments in the military space market is the debate in the U.S. over the separation of space activities from the Air Force. This debate led to the creation of the Space Force. Production of military satellites will be largely unaffected by this development for many years, leading to stable production forecasts. Factors driving production, such as the need to replace in-orbit assets and to counter growing threats to space assets, will remain the same. Production in China and Russia will drive the military satellite market during the middle of Forecast International’s current forecasting period of 2023-2032, although Russian efforts might be hampered by the war in Ukraine. The need for replacement of Western satellites by the start of the next decade should drive production through the 2020s.
At the same time, many militaries will begin to rely on alternative means of accessing the satellite capabilities needed to conduct operations. One such method will be to rely on the commercial market. For example, the U.S. Department of Defense leases capacity on commercial communications satellites to supplement its own birds. SpaceX, for example, has stood up a business line called Starshield, a derivative of the Starlink created for the military. Governments are also investigating hosted payload arrangements, whereby a government pays a commercial satellite operator to install a government-developed payload on board a commercially operated satellite. The U.S. Pathfinder 2 transponder payload on Hispasat’s Amazonas Nexus will provide military communications throughout the satellite’s lifetime. This arrangement provides additional funding to commercial satellite operators while offering militaries a way to reduce overall costs, making both parties keen on expanding the number of hosted payloads in orbit. Bureaucratic and technical issues still need to be overcome, but hosted payloads are expected to increase in number over the next 10 years.
Another use of commercial satellites for military purposes arose from the current war in Ukraine. SpaceX has shipped Starlink terminals to Ukraine to provide that country with Internet service. The extent to which the Ukrainian military uses Starlink is not fully known, but some use is likely, along with civilian use. Warzones with destroyed or damaged infrastructure therefore represent a case where space-based communication can be beneficial.
The U.S. DoD is also investigating a plan called disaggregation. With disaggregation, larger numbers of smaller, simpler satellites would be purchased rather than smaller numbers of larger, complex satellites such as Advanced Extremely High Frequency (AEHF) and Mobile User Objective System (MUOS) spacecraft. An example of this is the LEO portion of the National Defense Space Architecture, the so-called Transport Layer and Tracking Layer. The Pentagon believes disaggregation will lead to satellite networks that have more redundancy (allowing them to survive an attack) and will reduce development costs and timelines. The rise of small satellites in the commercial market, driven by hardware miniaturization, will further accelerate interest in small disaggregated satellites.
Lockheed Martin will continue to have the largest piece of the military satellite market over the next 10 years. It will be joined by CASC, Mitsubishi, and Northrop Grumman as the largest military satellite manufacturers. Even as defense spending stabilizes in the U.S., Northrop Grumman and Lockheed Martin maintain major positions in the manufacture of military satellites. Airbus, ISS Reshetnev, and OHB benefit from strong demand from home governments.
Over the next 10 years, Forecast International expects approximately 850 military satellites to be produced, having a total value of about $53.95 billion.
While these military systems range in size and price, many will be large and expensive GEO satellites such as the Next-Gen OPIR birds, while others will be smaller, less expensive LEO constellations such as the Transport Layer.
Forecast International’s Space Systems Forecast – Satellites & Spacecraft product covers communications, remote sensing, scientific, and navigation spacecraft. Individual reports detail the markets for commercial networks like Intelsat and military systems such as the SBIRS constellation. Satellites covered range in size from small CubeSats to large platforms like the Boeing-702 and SSL 1300. The service also features reports on new market entrants like Planet of San Francisco and OneWeb. Click here to learn more.