The AI and Robotics in A&D Market is projected to grow from USD 17.1 billion in 2020 to USD 36.64 billion, registering a CAGR of around 4.63% during the forecast period (2021-2026).
The global aerospace and defense (A&D) manufacturing sector is undergoing an unprecedented disruption due to the COVID-19 pandemic. However, the defense sector is expected to remain stable, and even grow as most countries have not reduced their defense budget and remain committed to sustaining their military capabilities. Supply-side shocks are perhaps some of the most visible effects of the pandemic’s impact on the defense sector. Firms located in countries badly affected by COVID-19 or those that are dependent on supply chains located in affected countries are the immediate victims of the pandemic. For instance, Italian shipbuilder Fincantieri was forced to suspend its operations till March 2020 due to the pandemic even when it was scheduled to deliver four new corvettes to the Qatari Navy. Thus, the deliveries could be pushed back if the company extends the closure of its facilities – a probable course of action that could have been taken if Italy could not flatten its COVID-19 growth curve. Thus, due to the widespread disruption in the supply chain, some of the defense programs could face minor cost escalations and delays in the short term.
The ever-increasing application of AI-based technologies in the A&D sector and increasing investments being funneled to develop and integrate AI and machine learning (ML) into the end-user sectors are anticipated to drive the market in focus during the forecast period. However, the associated technical and operational challenges that are often observed during the initial stages of development and adoption of a nascent technology are hindering the adoption of AI-based technologies.
Key Market Trends
Military Application Segment to Dominate During the Forecast Period
The plethora of applications of AI within the military segment, such as big data analytics for better decision making, automated logistics through the integration of unmanned ground vehicles (UGV), and unmanned aerial vehicles (UAV), bioinspired robots (swarm AI and deep neural networks), underwater mines location through neural networks, and object location, are expected to promote market growth during the forecast period. The rise in investments towards the development and integration of AI and robotics, coupled with enhanced defense budget allocation toward the R&D and acquisition of AI-based equipment are also anticipated to augment market prospects during the forecast period. For instance, out of 21,000 equipment contracts published by of People’s Liberation Army’s (PLA) China in 2020, approximately 350 records were aligned to AI systems and equipment. In October 2021, NATO announced plans to launch an innovation fund worth USD 1 billion as its initial strategy to stay ahead of the competition within the AI vertical. In June 2021, Pentagon announced plans to spend USD 874 million on AI and machine learning technologies under DOD budget 2022 signifying a YoY increase of 50% in budget allocation towards AI-based technologies.
Asia-Pacific to Witness Highest Growth During the Forecast Period
Asia-Pacific is slated to witness the highest growth in the adoption of AI and ML technologies as the OEMs and operators alike are envisioned to enhance their investment in the AI integration processes across the supply chain. Countries such as Japan, South Korea, and China have emerged as the leading innovators in the field of AI development and integration. Many institutes in the region are involved in research activities pertaining to advanced applications of AI in the aviation industry. Numerous aircraft and associated components manufacturing units in Asia-Pacific have witnessed steady benefits from the incorporation of AI technologies. For instance, the use of adaptive machining and cutting-edge automated inspection systems at the Pratt & Whitney facility in Singapore has caused steady growth in output volumes for the past couple of years and the facility achieved full production capacity in 2019. Moreover, innovations pertaining to AI are driving the growth of the market in the region. For instance, in May 2017, OpenJaw Technologies introduced its chatbot OpenJaw t-social, which is powered by IBM Watson AI, aimed at airlines, loyalty programs, and online travel agencies. The chatbot can adjust its responses based on the scope of the questions asked and gains intelligence with time through machine learning. China envisions to use AI technologies to strengthen the People’s Liberation Army (PLA) by enabling it to engage in intelligent warfare, defined by strategists as the operationalization of AI and its enabling technologies, such as cloud computing, big data analytics, quantum information, and unmanned systems, for military applications. The PLA aims to achieve full modernization by 2035 and at par with the US military by 2050. In 2017, China unveiled the New Generation Artificial Intelligence Development Plan outlining its strategy for the development of AI for defense applications such as providing support to command and decision-making, military deductions, defense equipment, and other applications. Such developments are anticipated to have a profound positive effect on the market in focus during the forecast period.
The market for artificial intelligence and robotics in aerospace and defense is highly fragmented with the presence of including robot manufacturers and OEMs that offer products and solutions incorporating AI hardware and software for aerospace and defense end users. In addition, the market also comprises AI and robotic technology providers for the OEMs. Some of the leading market players include The Boeing Company, Lockheed Martin Corporation, Airbus SE, and IBM Corporation. To expand their presence in the market, the technology companies are partnering with aerospace and defense OEMs to develop new and advanced AI-based solutions that will enhance the safety and efficiency of operations by streamlining mission effectiveness. On this note, in October 2021, IBM and Raytheon Technologies signed a partnership agreement to develop advanced AI, cryptographic and quantum solutions for the aerospace, defense, and intelligence industries. The systems integrated with AI and quantum technologies are expected to have better-secured communications networks and improve decision-making processes for aerospace and government customers. Similarly, earlier in July 2020, NEC Corporation and SITA signed entered a collaboration to develop new solutions that enable a secure walk-through travel experience at airports. The new solutions will leverage I:Delight identity management platform of NEC and SITA’s Smart Path and SITA Flex solutions. The companies will collaborate to develop the new solution integrated with Common Use Platforms and AI technologies.
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